Skip to main content

Full text of "Upton Sinclair Presents William Fox"

See other formats 


Keep  Your  Card  in  ThisPocket 


5 

to  report  aarnk  «t 


or  mutilated  are  e 

on  fiStS    h  dSI  iS  "W"**"  f<*  »n  books  *awn 
notioS131'7  f°r  OWrJn9  books  2o  a  da?  Plus  oost  of 

ohange 


Public  Library 

Kansas  City,  Mo. 


TENSION    ENVELOPE    CORP. 


UPTON  SINCLAIR 

PRESENTS 
WILLIAM  FOX 


BOOKS  BY 

Upton  Sinclair 


THE  JOURNAL  OF  ARTHUR 
STIRLING 

MANASSAS,    A    NOVEL    OF    THE 
CIVIL  WAR 

THE  JUNGLE 

THE  OVERMAN 

THE  MILLENNIUM 

THE  METROPOLIS 

THE  MONEYCHANGERS 

SAMUEL,  THE  SEEKER 

THE  FASTING  CURE 

LOVE'S  PILGRIMAGE 

SYLVIA 

SYLVIA'S  MARRIAGE 

DAMAGED  GOODS 

THE  CRY  FOR  JUSTICE 

THE  PROFITS  OF  RELIGION 

KING   COAL,    A  NOVEL  OF  THE 
COLORADO  STRIKE 

JIMMIE  HIGGINS 


THE  BRASS  CHECK 

100%— THE  STORY  OF  A 
PATRIOT 

THEY  CALL  ME  CARPENTER 
THE  BOOK  OF  LIFE 

THE  GOOSE-STEP— A    STUDY   OF 
AMERICAN  EDUCATION 

THE  GOSLINGS — A  STUDY  OF  THi 
AMERICAN  SCHOOLS 

MAMMONART 

LETTERS  TO  JUDD 

THE  SPOKESMAN'S  SECRETARY 

OIL! 

MONEY  WRITES! 

BOSTON 

MOUNTAIN  CITY 

MENTAL  RADIO 

ROMAN  HOLIDAY 

THE  WET  PARADE 

AMERICAN  OUTPOST 


PLAYS 


PRINCE  HAGEN 

THE  NATUREWOMAN 

THE  SECOND  STORY  MAN 

THE  MACHINE 

THE  POT-BOILER 


HELL 

SINGING  JAILBIRDS 

BILL  PORTER 

OIL  (DRAMATIZATION* 


XVI  LLIAM     FOX 


UPTON   SINCLAIR 

PRESENTS 

WILLIAM  FOX 


PUBLISHED    BY   THE    AUTHOR 

LOS  ANGELES  (WEST  BRANCH),  CALIFORNIA 


COPYRIGHT,  IQ33,  BY  UPTON  SINCLAIR 

PRINTED  IN  THE  UNITED  STATES  OF  AMERICA 

ALL  RIGHTS  MESEKVIB 


UPTON  SINCLAIR 

PRESENTS 

WILLIAM  FOX 


A   FEATURE   PICTURE  OF  WALL  STREET  AND 
HfGH  FINANCE 

In  Tu/entytiine  Reels  with  Prologue  and  Epilogue 

A  Melodrama  of  Fortune*  Conflict  and  Triumph,  Packed 
with  ThriOb  and  Heart  Throbs*  East  Side  Boy  Conquers 
Fame  and  Power.  The  Masters  of  Millions  Envy  His 
Triumph  and  Hot  His  Downfall.  The  Octopus  Battles  the 
Fox*  The  Ehid  of  a  Century!  The  Sensation  of  a  Lifetime! 

Never  in  Screen  History  has  there  been  a  Feature  so 
Stupendous  as  this.  An  Inside  Story*  a  Firsthand  Revela- 
tion of  Politics  and  Finance,  with  a  Ten  Billion  Dollar  Cast 
of  Statesmen  and  Financiers. 

At  the  sauae  time  a  Story  for  the  Family,  tense  and  mov* 
ing,  with  Love,  Loyalty  and  a  Woman's  Soul*  A  Romance 
so  fine,  so  true,  so  loaded  with  Laughter  and  Tears*  that 
none  can  resist  it. 


AMERICA  WAITS  FOR  THIS  DRAMA! 

PUT   IT  AT  THE  HEAD  OF  YOUR  PROGRAM! 

IT  WILL  PACK  THEM   IN!! 


FLOYD  DELL  REPORTS  TO  A  NEW  YORK 
PUBLISHER: 

I  think  this  is  a  very  important  book. 

First,  because  it  tells  what  a  man  important  to  his  times 
thinks  about  himself. 

Second,  because  of  the  importance  of  the  war  between  the 
financiers  and  the  organizers  in  this  motion  picture  field. 

Third,  because  of  the  immense  human  interest  and  enthralling 
excitement  of  the  story.  There  has  never  been  a  book  on  this 
subject  so  completely  readable  by  ordinary  people.  I  myself 
am  bored  with  statistics,  I  don't  like  business  stories,  and  I 
started  this  book  with  no  hope  of  ever  being  able  to  read  it 
through.  It  kept  me  awake  all  night — I  could  not  stop  reading 
it.  The  story  has  terrific  interest  and  suspense. 

Also  it  hits  the  public  interest  of  the  times  right  in  the  center. 
It  will  be  in  every  middle  class  home  this  winter,  and  millions  of 
people  will  be  talking  about  it.  It  is  going  to  be  one  of  the  great 
literary  sensations  in  the  history  of  American  publishing. 

Upton  Sinclair's  reputation  has  survived  every  exposes  he  has 
handled,  and  no  one  has  ever  sued  him  for  libel,  He  has  the 
goods  on  people  and  they  know  it.  There  can  be  no  question 
but  that  the  facts  are  substantially  as  the  book  states  them,  for 
these  are  all  matters  of  court  record.  The  interpretations  alone 
can  be  questioned. 

I  should  say  that  the  only  reason  for  not  taking  advantage 
of  the  greatest  opportunity  of  our  times  in  publishing  would  be 
a  belief  in  the  actuality  of  this  alleged  criminal  conspiracy,  and 
the  fear  that  the  conspiracy  would  extend  to  the  point  of  a  crimi- 
nal attempt  to  pumsti  and  wreck  the  publisher  who  put  Fox's 
case  before  the  public.  Or  have  the  bankers  burned  their  fingers 
enough  in  this  Fox  business  without  attempting  illegitimate  inter- 
ference? In  the  end  it  would  be  useless,  for  the  book  will  be 
published  and  they  can't  stop  it 

This  is  the  most  exciting  book  I  have  read  for  years*  It  adds 
a  new  and  significant  figure  to  American  industrial  biography. 
It  is  destined  to  an  immense  popularity,  and  it  will  make  Uptcm 
Sinclair  the  most  widely  read  author  in  America,  It  will  be  in 
front  page  headlines,  and  a  Congressional  inquiry  may  keep  It 
there  for  weeks  or  months.  The  films  are  dear  to  the  heart  of 
America, 


CONTENTS 

PROLOGUE   ........... 

REEL  ONE 


REEL  TWO 

Shoe*  Bidding  <ant!  Lozengers    ,...,.,.,»       14 

REEL  THREE 

Pretzels  and  Buffalo  Pans     .......     „     .     .     .       23 

REEL  FOUR 

TsJjtJ^eJodteans  and  Common  Shows    ....,..»       32 

REEL  FIVE 

The  Ro<i4  to  Fortune     .     .......     ,     .     .     .      46 

REEL  SIX 

Over  the  Hill    ...,..,..,...,.       56 

REEL  SEVEN 

The  Micbs  Touch  ..,.,.,„,„..„.       67 

REEL  EIGHT 

Red  T^pe     ...,...,.*......       80 

REEL  NINE 

The  Vwltum     ,....,..»..,...      94 

REEL  TEN 

The  Octopus     ...„.,..,..,...     102 

REEL  ELEVEN 

Reaping  the  Whirlwind      ..*.».,,...     114 

REEL  TWELVE 

The  Fox  Trap  .......,,..„„„.     127 

REEL  THIRTEEN 

The  Fox  Hesildtes  .........     .....     140 

REEL  FOURTEEN 

TJw?  Pox  Bntws     .....*,.......!« 

vfi 


viii  CONTENTS 

REEL  FIFTEEN 

The  Trap  Shuts 167 

REEL  SIXTEEN 

The  Fiend  Ingratitude 184 

REEL  SEVENTEEN 

BarJ{  Solidarity 1% 

REEL  EIGHTEEN 

Ford  Jo\es 207 

REEL  NINETEEN 

The  Reptyle 221 

REEL  TWENTY 

Legal  Actions 252 

REEL  TWENTY-ONE 

The  Scales  of  Justice 247 

REEL  TWENTY-TWO 

A  Judge  in  Business 259 

REEL  TWENTY-THREE 

The  Stockholders  Meet 272 

REEL  TWENTY-FOUR 

The  Japanese  Meeting 287 

REEL  TWENTY-FIVE 

Captain  Kidd j0j 

REEL  TWENTY-SIX 

The  Business  of  Loot 315 

REEL  TWENTY-SEVEN 

Empty  Shells 326 

REEL  TWENTY-EIGHT 

Surttming  Up 310 

REEL  TWENTY-NINE 

Aftermath j^p 

EPILOGUE. 360 


PROLOGUE 

FOR  thirty  years  I  have  been  "'presenting"  to  the  public  the 
princes,  dukes  and  barons  of  our  industrial  feudalism.  As  a 
rule  !  have  "presented"  them  under  the  guise  of  fiction*  Some- 
times my  critics  have  said  "Good  melodrama"  and  sometimes 
"Bad  melodrama,"  but  always  they  have  agreed  that  "SIiKlair 
exaggerates."  Learned  book  reviewers  in  Siam  and  Tasmania 
declare:  "Such  things  are  impossible."  Living  as  far  away  as 
it  is  possible  to  get  on  this  earth,  they  still  feel  safe  in  asserting: 
"America  cannot  be  like  that." 

So  this  time  I  am  presenting  a  living  man.  This  time  I  am 
telling  a  story  which  happened  in  New  York  City  less  than  three 
years  ago.  This  time  there  are  names,  places,  recent  dates  and 
an  appendix  full  of  documents  and  court  records.  This  time 
even  Siam  and  Tasmania  will  have  to  admit  that  ^America  is 
like  that" ;  for  no  melodrama  that  !  have  been  able  to  invent  in 
my  thirty  years  of  inventing  has  been  more  packed  with  crimes 
and  betrayals,  perils  and  escapes,  than  the  story  of  William  Fox* 
No  thriller  among  the  750  feature  pictures  which  Fox  himself 
produced  during  twenty-five  years  as  a  producer  was  ever  so 
perfectly  constructed,  with  its  humble  hero  battling  his  way  to 
power,  its  polished  villains,  conspirators  of  high  estate,  each  with 
a  carnation  in  his  buttonhole;  its  complications  of  intrigue,  its 
mysteries,  some  of  them  never  solved  to  this  day,  its  cruel  suffer- 
ing and  Its  grand  climax— the  hero  escaping  with  the  greater 
part  of  his  fortune,  and  the  villains  dragged  down  to  ruin  by 
the  judgment  of  an  implacable  Providence* 

A  couple  of  months  ago  I  had  the  honor  of  being  invited  to 
the  home  of  a  Hollywood  author ;  one  of  those  new-style  authors 
of  the  screen-world  who  could  not  think  of  writing  for  less  than 
$2»OQQ  a  week,  and  who  live  in  Moorish  palaces  on  hilltops,  mud 
have  Negro  servants  in  swallow-tail  coats  to  serve  you  ealavo 
salad  and  caviar  sandwiches  and  liquids  enough  to  float  E  battle- 
ship. The  company  fell  to  discussing  the  state  of  Ajoraeiica^  and 
I  explaiiHsd  that  when  I  started  muckraking  thirty  yemrfc  ago, 
the  sigiuficant  phenometsoii  Itad  been  the  dimibat5f*g  of  tlte  Iffle 

ix 


x  PROLOGUE 

business  man  by  the  big  business  man ;  but  now  the  situation  had 
changed,  and  the  feature  was  the  replacing  of  the  big  business 
man  by  the  investment  banker.  I  mentioned  a  case  in  Boston* 
the  story  of  a  manufacturer  who  had  his  business  taken  away 
from  him  by  a  conspiracy  of  bankers.  He  had  brought  suit,  and 
after  a  trial  lasting  more  than  a  year,  the  jury  had  given  him  a 
verdict  of  $10,000,000. 

My  friend,  the  Hollywood  author,  broke  in;  "Sinclair,  why 
do  you  fool  with  pikers  like  that,  little  $10,000,000  men  ?  Why 
don't  you  tell  us  about  the  $1,000,000,000  men,  or  the  $100,000,000 
ones  at  least?" 

I  answered  that  I  had  never  met  any  $1,000,000,000  men,  nor 
even  $100,000,000  ones,  and  I  feared  that  my  imagination  would 
not  be  equal  to  the  task.  Said  my  host :  f*  Why  don't  you  write 
the  story  of  William  Fox?  There's  one  made  to  order  for  you : 
a  plain  hold-up  in  broad  daylight — and  by  our  most  eminent  and 
respectable  financiers !" 

The  company  talked  for  a  while  about  William  Fox.  He 
had  been  the  biggest  man  in  the  industry,  the  one  real  business 
man  of  them  all,  the  one  who  could  have  saved  them  in  this 
slump.  And  not  because  he  was  in  trouble,  but  because  he  was 
so  successful,  because  he  was  making  too  much  money,  the  Wai! 
Street  crowd  had  surrounded  him,  blocked  him  offt  and  taken 
his  profit-making  machine  away  from  him.  And  the  strangest 
thing— when  they  had  got  it,  they  didn't  know  what  to  do  with 
it,  all  they  were  able  to  do  was  to  loot  the  properties,  and  now 
they  were  a  shell,  ready  to  collapse.  They  had  bought  Fo^s 
business,  but  not  his  brain. 

My  mind  was  on  other  things,  and  I  gave  no  tttcmght  to  my 
friend's  suggestion.  But  a  couple  of  days  later  my  telephone 
rang,  and  a  woman's  voice  said:  "This  is  Mr,  William  Fox*s 
secretary.  Mr.  Fox  wants  to  know  if  he  may  call  to  see  you/* 

I  have  learned  to  be  shy  over  the  telephone.  **Wfaat  does 
lie  want?"  I  asked. 

"He  didn't  tell  me,"  saiC  the  voice;  "but  he  told  me  to  say 
he  had  nothing  to  sell  you." 

"Well,  teH  him  I  have  nothing  to  buy  with/*  I  answered. 

Next  morning  a  limousbe  roDed  up  to  my  humble  door,  and 
WflEarn  Fox  descended,  accompanied  by  a  little  gentleman,  wtio, 


PROLOGUE  xi 

1  learned,  was  Ms  lawyer*  It  turned  out  that  he  had  come  to 
sell  me  something  after  all ;  in  the  slang  of  our  commercial  era, 
he  wanted  to  **self  me  himself.  Ever  since  his  battle  had  begun, 
he  had  thought  of  me  as  the  person  to  be  its  historian.  His  wife 
had  read  some  of  niy  books  and  believed  in  me*  A  year  ago  his 
brother-in-law  had  sent  me  a  telegram,  asking  if  I  had  any  plans 
to  come  east.  As  I  had  no  such  plans,  he  had  waited  until  he 
came  west 

He  showed  me  some  "rushes0  of  the  story*  He  brought 
the  stars  of  the  production,  one  after  another,  before  the  foot- 
lights, some  of  them  persons  whom  I  knew,  all  of  them  persons 
whom  the  world  knows*  or  wants  to  know:  Herbert  Hoover* 
Henry  Ford*  John  D.  Rockefeller,  |r.f  Charles  Evans  Hughes, 
Samuel  Unterniyer,  Will  H*  Haysf  Bernard  M.  Barach,  Adolph 
Zukor,  Louis  H  Mayer,  Clarence  M.  Dillon,  Albert  H.  Wiggin, 
Harry  L,  Stuart,  Harley  L,  Clarke — a  score  of  leading  statesmen 
and  financiers.  He  pulled  the  strings  and  made  these  figures 
rehearse  their  parts.  Every  now  and  then  Mr.  Reass,  the  lawyer* 
would  think  of  some  detail  which  had  been  omitted ;  they  would 
take  turns,  or  sometimes  it  would  be  a  duct. 

What  William  Fox  was  offering  me  was  a  theme  for  a  novel. 
But  I  have  written  six  novels  of  Wall  Street  and  high  finance, 
and  the  critics  of  the  last  one,  ^Mountain  City/*  said  I  was 
repeating  myself*  I  saw  at  once  that  this,  if  I  wrote  it,  would 
be  a  fact  story,  told  in  detail  and  documented. 

I  asked  for  time  to  think  it  over,  and  the  limousine  rolled 
away.  In  the  end  I  said  I  would  go  in  with  William  Fox  <m  two 
conditions:  he  would  leave  the  matter  of  the  form,  and  style  of 
the  book  to  me,  and  he  would  pledge  me  two  weeks  of  his  time, 
with  a  stenographer  sitting  by* 

He  accepted,  and  we  set  to  work.  His  story  stretched  out, 
and  the  two  weeks  became  three  weeks,  four  weeks.  Eve  weeks. 
Every  day  for  thirty-six  days  he  came  to  my  home,  and  from 
10  in  the  morning  until  1  or  2  he  talked  and  I  questioned. 
The  stenographer  fell  behind  and  we  had  to  have  two*  Whea 
we  got  through*  there  were  758  typewritten  pages*  enough  for 
two  volumes.  In  addition,  there  Is  a  suitcase  and  two  drawtars 
full  of  correspondence,  pamphlets,  court  records  and 
reports ;  also  there  are  die  New  York  uewspapets,  both  tibe 


xii  PROLOGUE 

and  financial  pages,  telling  the  day  by  day  story  of  the  year 
long  battle.  If  you  who  read  this  book  do  not  know  the  story 
of  William  Fox,  it  will  be  my  fault,  not  his. 

William  Fox  started  in  the  motion  picture  business  in  the 
year  1904,  he  being  then  twenty-six  years  of  age,  and  putting  in 
a  capital  of  $1,600,  He  worked  with  demoniac  energy  for 
twenty-five  years,  at  the  end  of  which  time  he  controlled  from 
four  to  five  hundred  millions  of  dollars.  Only  a  small  part 
of  it,  perhaps  10  per  cent,  belonged  to  him  personally;  the 
rest  was  the  property  of  stockholders  and  investors  who  trusted 
him.  He  never  took  a  penny  of  salary  for  his  labors  as  president 
of  the  Fox  Theatres  Corporation,  and  in  1926  he  voluntarily 
stopped  his  salary  of  $200,000  yearly  as  president  of  Fox  Film 
Corporation.  He  owned  the  majority  of  voting  shares,  which 
gave  him  the  power  to  name  the  boards  of  directors,  These 
shares  drew  dividends  on  equal  terms  with  all  the  other  shares* 
and  William  Fox  was  content  to  take  his  chances  with  the  rest 
of  the  stockholders.  Practically  all  the  money  had  come  out  of 
profits,  and  anyone  might  receive  these  profits,  provided  that  Fox 
was  master  of  the  machine  and  allowed  to  direct  its  activities* 

Just  what  was  it  that  happened  to  William  Fox?  It  is  no 
new  thing,  btit  an  old  story,  which  I  have  told  several  times 
before.  In  the  year  1908,  I  wrote  a  novel  called  **The  Money- 
changers," which  was  considered  at  the  time  to  be  a  very  des- 
perate and  daring  thing,  I  have  told  in.  "The  Brass  Check**  how 
I  got  the  information  for  this  noveL  Suffice  it  here  to  say,  I 
charged  that  the  elder  Pierpont  Morgan  deliberately  brotight 
on  the  panic  of  1907,  in  order  to  wreck  and  take  over  three  inde* 
pendent  trust  companies  in  New  York  which  were  interfering 
with  his  domination*  Trust  companies  were  new  tWbags  in  tho®e 
days,  and  these  three  were  taking  in  too  much  money,  and  Morgan 
considered  that  Oakleigh  Thome  and  F.  Augustus  Heiaze  and 
Charles  T.  Barney  were  improper  persons  to  have  the  handling 
of  so  much  money.  It  is  quite  true  that  Thome  and  Heinle 
were  irresponsible  persons,  gamblers  and  hard  drinkers ;  but  the 
main  thing  wrong  with  them  was  the  fact  that  they  did  not  take 
Morgan's  orders. 

The  method  used  was  to  lend  them  money  and  lead  them 
to  "extend  themselves";  to  "string  them  along"  with  promises 


PROLOGUE  xrii 

which  were  not  kept ;  to  start  a  stock  market  raid  and  beat  down 
the  price  of  the  securities  in  which  they  were  known  to  have 
invested ;  to  start  rumors  that  they  were  in  financial  trouble,  and 
have  all  the  hired  financial  writers  of  Wai!  Street  publish  these 
reports;  then  to  call  all  their  loans  at  once,  start  a  *Yun"  of  their 
depositors,  and  use  the  power  of  the  banking  world  to  see  that 
they  got  no  credit. 

That  is  the  way  the  job  is  done.  You  pass  the  word  to  cer- 
tain key  bankers  that  Oakleigh  Thome  and  F.  Augustus  Heinze 
and  Charles  T.  Barney  are  marked  for  destruction,  and  that 
assistance  given  to  them  will  constitute  an  unfriendly  action 
towards  J.  P,  Morgan  &  Co.  So  they  will  get  no  credit,  and 
the  three  trust  companies  will  close  their  doors,  and  interests 
friendly  to  J.  R  Morgan  &  Co.  will  take  them  over,  R  Augustus 
Heinze  and,  Oakleigh  Thome  will  retire  into  obscurity »  and 
Charles  T.  Barney  will  shoot  his  head  off,  and  Jf  the  panic  gets 
out  of  hand  and  threatens  the  entire  financial  structure  of  the 
country*  J*  P»  Morgan  will  summon  his  banker  colleagues  to  his 
office  and  tell  them  how  much  cash  is  needed  to  stop  the  runs  on 
banks,  and  what  proportion  each  of  them  will  put  tip. 

I  heard  a,  story  of  that  conference.  Said  one  banker; 
"Mr.  Morgan*  I  have  kept  my  institution  safe  and  sound,  and 
I  do  not  feel  responsible  for  the  troubles  of  those  institutions 
which  have  allowed  their  funds  to  be  used  for  stock  market 
manipulation,  I  propose  to  stay  inside  my  bank  and  let  the 
others  look  out  for  themselves." 

Old  Morgan's  purple  nose  turned  several  shades  darker,  and 
he  hit  the  table  a  bang  and  answered :  "You  stay  in  your  bank, 
and  I'll  build  a  wall  around  it  and  you'll  never  come  out  of  it 
until  you  are  dead!'1 

Twenty  years  later,  I  told  of  another  such  hold-up  in  my 
novel,  "Boston."  The  gentleman  who  in  that  novel  is  called 
"Jerry  Walker11  was  a  manufacturer  of  felt;  a  business  man 
who  must  have  worked  with  the  same  intensity  as  William  Fox, 
for  he  had  taken  over  most  of  the  felt  plants  in  New  England, 
and  was  reaching  out  for  allied  enterprises.  Here  was  a  treasure 
chest*  and  the  bankers  decided  that  it  would  be  safer  in  their 
hands  than  in  his*  They  promised  him  new  financing  and  encour- 
aged him  to  spread  out,  then  they  began  staffing,  and 


XIV 


PROLOGUE 


they  had  him  surrounded  and  walled  off,  and  in  the  end  &e  was 
forced  to  sign  his  properties  over  to  them. 

I  got  a  peculiar  line  on  this  story  through  an  old  friend  in 
Boston,  who  owns  one  of  the  largest  paper  manufacturing  indus- 
tries in  America.  This  gentleman  thought  that  on  points  of  law 
the  jury  had  been  mistaken  in  awarding  $10,000,000  damages 
to  "Jerry  Walker/'  and  that  the  Supreme  Court  justices  of 
Massachusetts  had  been  justified  in  overthrowing  this  verdict 
for  the  benefit  of  their  intimate  friends  and  fellow  club  members, 
the  great  Boston  bankers.  But  my  friend  said  that^  there  ^could 
be  no  question  that  there  had  been  a  bankers*  conspiracy,  It  was 
a  regular  practice  and  becoming  more  common  all  the  time,  Said 
he:  "It  is  so  dangerous  that  I  have  not  dared  to  let  my  business 
expand  as  it  normally  should,  because  I  am  afraid  to  owe  money 
to  the  Boston  banks." 

I  smiled,  and  told  him  of  something  that  had  happened 
twenty-two  years  back.  I  had  been  in  the  office  of  "Every- 
body's  Magazine/'  talking  with  R  J.  Ridgwty,  the  publisher, 
These  were  the  old  muckraking  days,  and  the  magazine  was 
publishing  Tom  Lawson  and  my  attacks  tapon  the  Beef  Trust, 
and  its  circulation  was  growing  a  hundred  thousand  a  month. 
Ridgway  was  needing  new  carloads  of  paper,  and  was  bitterly 
criticizing  the  concern  w&ich  furnished  him  paper,  because  It 
would  not  contract  to  supply  the  larger  quantity  required.  **One 
of  those  moss-backs  up  in  Boston,"  he  said-  "He  inherited  hits 
business,  and  hasn't  got  the  nerve  to  let  it  grow/*  To  give  you 
the  full  significance  of  that  incident  I  must  add  that  my  friend 
the  paper  manufacturer  is  still  head  of  his  concern;  while 
"Everybody's  Magazine"  was  soon  swallowed  by  the  bankers, 
and  Erman  J*  Ridgway  retired  into  private  life* 

So  you  see  that  what  happened  to  William  Fox  was  no 
accident  and  no  sporadic  episode*  It  is  a  stage  in  the  evolution 
of  American  industrial  affairs.  There  is  no  longer  any  room 
in  otir  competitive  world  for  the  little  $10,000,000  business  man, 
nor  even  for  the  little  $100,000,000  business  man.  It  is  the  dty 
of  the  $1,000,000,000  giants.  To  sit  in  at  this  poker  game,  it  is 
not:  enough  to  have  hundreds  of  millions  in  capital,  you  must 
have  hundreds  of  millions  in  surplus*  You  must  have  enormous 
cash  deposits  in  the  great  Wall  Street  banks,  to  ttse  in  "rigging 


PROLOGUE  xv 

the  market"  You  must  be  able  to  beat  down  the  securities  of 
your  rivals.  You  must  be  able  to  manipulate  your  own  stocks, 
driving  them  up  and  selling  them,  then  driving  them  down  and 
buying  them  back- 

If  you  are  an  honest  executive  or  director,  you  are  doing  these 
things  for  the  benefit  of  your  corporation,  using  the  profits  to 
increase  the  corporation's  surplus;  while  if  you  are  an  ordinary 
executive  or  director,  you  are  doing  these  things  for  your  own 
profit.  Have  your  corporation  lend  you  money  upon  shaky  col* 
lateral  or  none  at  all,  and  then  use  those  funds  with  your  inside 
knowledge  to  make  a  fortune  for  yourself, 

If  you  are  a  great  Wall  Street  banker  today,  you  have  formed 
a  securities  corporation  allied  with  your  bank,  which  will  enable 
you  to  borrow  money  from  your  bank,  and  to  speculate  in  all 
the  securities  which  the  banking  laws  of  the  state  and  nation 
do  not  allow  the  bank  to  own.  If  you  are  one  of  tie  really  big 
and  active  insiders,  you  have  forced  yourself  into  a  position  of 
power  where  you  are  able  to  intimidate  other  bankers,  and  forbid 
them  to  lend  money  to  a  certain  victim  whom  you  have  marked 
for  your  own.  If,  for  example,  you  come  upon  a  Fox  who  owns 
a  treasure  chest—something  which  a  Fo%  has  no  buslne&s  what- 
ever to  be  in  possession  of — you  can  take  that  Fox  and  put  a 
brand  or  labd  on  him :  "Property  of  the  Telephone  Company  and 
the  Chase  National  Bank.  Hands  Off/' 

If  you  studied  economics  in  college,  you  were  taught  the 
classic  defense  of  capitalism.  You  were  given  the  touching 
picture  of  the  man  who  worked  and  saved  his  money  and  gradu- 
ally btiilt  tip  a  business.  You  were  told  that  he  was  the  "entre- 
preneur," the  one  who  undertook  or  adventured,  and  ran  the  busi- 
ness risks,  and  therefore  was  entitled  to  the  profits  of  his  great 
service.  American  civilization  has  been  built  whole  out  of 
respect  for  these  great  adventurers.  The  public  saw  business  te 
the  hands  of  men  who  had  started  as  office  boys,  or  laborers  jta 
the  plant,  and  had  built  tip  the  concern  and  proved  tibeir  ability 
to  run  it  better  than  anybody  elsej  so  the  public  bdiored  that 
the  system  was  sound  and  the  claims  of  the  capitalist  justified. 

But  now  America  has  come  to  a  new  stage-  Bttstoess  is  »o 
longer  to  be  left  in  the  hands  of  the  men  who  built  it  up.  It  has 
become  too  big,  its  financial  requirements  are  too  great,  tad  the 


xvi  PROLOGUE 

business  man  is  subject  to  the  financier.  In  the  moving  picture 
industry,  for  example,  it  became  necessary  four  or  five  years 
ago  to  make  an  enormous  expansion.  The  "movies"  gave  place 
to  the  "talkies/'  and  new  sound-proof  studios  had  to  be  built  by 
the  hundred,  with  enormously  expensive  new  equipment.  It 
became  necessary  for  20,000  theatres  in  America  to  install  sound 
apparatus  costing  $20,000  per  theatre.  For  all  this,  new  financ- 
ing was  needed,  and  the  ex-clothing  merchants  and  proprietors 
of  nickelodeons  who  had  built  up  the  moving  picture  industry 
were  obliged  to  seek  allies  among  the  great  masters  of  finance 
who  have  the  securities  and  the  gold  in  their  vaults,  and  who  are 
able  to  create  hundreds  of  millions  of  new  dollars  by  writing  a 
memorandum  on  a  pad. 

And  what  more  natural  than  that  these  great  men,  knowing 
their  power,  should  look  covetously  upon  a  chain  of  moving  pic- 
ture theatres  with  millions  of  patrons?  What  more  natural  than 
that  they  should  think  themselves  better  able  to  handle  such  a 
business  than  the  ex-clothing  merchants  and  proprietors  of 
nickelodeons?  The  financial  men  have  formed  chains  of  banks-, 
they  have  taken  over  railroad  systems  and  strings  of  power  com- 
panies, coal  mines  and  steel  mills;  the  securities  of  these  far- 
flung  enterprises  are  in  their  vaults,  deep  beneath  the  sidewalks 
of  Wall  Street,  protected  by  twenty  layers  of  steel  and  twenty 
feet  of  concrete,  and  various  devices  in  the  form  of  electrically ' 
charged  surfaces,  water  chambers,  poison  gas  chambers,  and  cor- 
ridors in  which  guards  are  locked  up  all  night  with  arrangements 
of  mirrors  whereby  they  can  see  all  around  the  vault,  and  electric 
buttons  which  they  are  required  to  push  every  five  minutes 
throughout  the  night. 

In  the  -  old  days  it  used  to  be  the  business  which  got  into 
trouble  which  fell  into  the  hands  of  the  bankers.  But  nowadays 
the  bankers  want  all  the  successful  businesses.  They  know  how 
to  run  all  business — or  can  hire  experts  to  do  it  for  them.  All 
through  the  Middle  West  they  are  taking  over  the  farms  and 
reorganizing  them  as  corporations.  Their  directors^  have  the 
financial  say  in  most  of  the  railroads  of  the  country,  in  most  of 
the  power  companies,  and  in  the  great  key  industries.  ^  So  far  as 
the  motion  picture  industry  is  concerned,  they  have  their  directors 
on  the  boards  of  every  one  of  the  big  concerns,  and  not  one  of 


PROLOGUE  xvii 

these  concerns  would  be  running  today,  were  it  not  for  money 
furnished  by  Wall  Street  banks  and  investment  houses.  This  is 
the  new  stage  to  which  America  has  come;  and  the  story  of  how 
the  change  has  been  brought  about,  how  the  wires  are  pulled  and 
the  snares  set—you  will  never  see  it  more  plainly  and  in  greater 
detail  than  in  this  "inside"  story  of  Fox  Film  and  Fox  Theatres. 

One  final  word  as  to  my  part  in  this  narrative,  There  are 
scores  of  interviews  and  scenes  here  narrated,  at  none  of  which  I 
was  present,  and  concerning  which  I  can  give  no  testimony*  This 
5s  William  Fox's  story  as  he  told  it  to  me,  and  my  job  has  been 
to  put  it  into  literary  form:  to  order  itT  select  the  vital  parts,  cut 
out  the  repetition,  and  clear  up  the  obscurities  by  questioning  my 
subject.  Wherever  there  are  letters,  affidavits,  court  records* 
financial  statements,  etc.,  I  have  mentioned  these  sources,  and 
am  of  course  responsible  for  quoting  these  correctly.  Also,  I 
have  here  and  there  stated  my  own  opinions,  always  making  clear 
that  they  are  mine.  But  for  all  the  statements  in  the  book  which 
rest  upon  the  authority  of  William  Fox,  he  stands  responsible. 
The  manuscript  has  been  submitted  to  him  and  the  story  is  his. 
The  letter  which  I  wrote  to  him,  embodying  our  understanding, 
declares:  "It  is  agreed  that  all  statements  of  fact  which  have  been 
read  and  verified  by  you  shall  he  made  upon  your  authority*  and 
that  you  agree  to  he  responsible  for  them."  The  letter  further- 
more states:  "It  is  understood  that  your  interest  in  the  work  is 
the  vindication  of  your  good  name  and  the  education  of  the  public 
in  the  matter  of  present-day  practices  in  high  finance;  and  I  am 
pledging  myself  to  co-operate  with  you  to  these  ends  and  to 
produce  a  work  which  will  serve  them/1 

At  the  request  of  William  Fox,  I  state  that  he  has  no  share 
in  the  royalties  from  this  book.  He  does  not  wish  anyone  to 
think  that  he  is  telling  his  story  for  money.  Not  wishing  to  lag 
behind  him  in  altruism,  I  am  making  the  book  over  to  the  Sinclair 
Foundation,  and  the  royalties  derived  from  its  sale  will  be  used 
for  the  purpose  of  putting1  a  set  of  twelve  vo!uraes*o£  my  books 
into  public  libraries  throughout  the  world. 


REEL  ONE 
CLOSE-UP 

1  BEGIN  by  ''presenting"  William  Fox  as  he  sat  In  my  study 
presenting  himself  to  me, 

The  study  is  a  king  high  room — like  a  church,  with  a  row  of 
windows  along  the  north,  and  open  doors  through  which  the 
Southern  California  sunshine  streams  in — -or  if  it  happens  to  be 
a  day  of  Southern  California  "high  fog,"  then  there  are  logs 
burning  in  a  fireplace*  William  Fox  sits  in  an  old-fashioned 
walnut  rocking-chair,  the  kind  known  as  a  "cradle-rocken"  He 
has  beside  him  a  little  stand  for  his  ash  tray,  and  his  glass  of 
water,  and  his  orange  juice  or  lemonade  when  it  arrives*  The 
stenographer  sits  at  one  side,  and  her  fingers  fly  busily.  Benja- 
min Reass,  the  family  lawyer,  listens  attentively,  for  the  most 
part  quiet  as  a  mouse.  I  sit  in  another  rocking-chair,  ten  feet 
from  my  subject,  and  watch  his  every  aspect  and  gesture,  study 
his  moods,  and  now  and  then  jot  down  a  question,  I  never  had 
so  long  a  story  told  to  me,  and  there  are  few  human  beings  I  have 
watched  for  so  many  hours.  If  1  cannot  make  him  real  to  you, 
I  will  prove  myself  ill  equipped  for  a  novelist. 

He  is  a  man  of  my  size,  which  is  medium.  He  used  to  be 
stout,  but  the  long  battle  wore  him  down,  and  now  he  Js  medium 
again.  Years  ago  he  wore  a  black  mustache,  but  now  he  is  smooth 
shaven,  JHe  has  a  good  Jewish  nose,  and  a  rather  round  face  with 
a  round  dome  above  it*  Time  and  hard  work  and  worry  have 
taken  the  hair  off  the  dome,  and  our  Southern  California  sunshine 
has  made  it  like  that  of  a  bronze  Buddha, 

He  is  going  to  play  golf  in  the  afternoon*  and  wears  a  light 
blue  coat,  or  sometimes  a  brown  one,  and  trousers  of  white  flannel 
or  striped*  Under  his  coat  is  a  white  sweater;  and  in  an  article 
published  in  "Fortune/*  the  magazine  which  caters  to  bankers 
and  magnates,  I  read  that  WtUjam  Fox  was  accustomed  to  appear 

*"*""  1 


2         UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

at  directors'  meetings  of  his  companies  wearing  a  sweater,  also 
white  socks;  whereas  Mr.  Harold  Leonard  Stuart  oi  Halscy, 
Stuart  &  Co.,  the  investment  banker  who  helped  to  mist  I'ox, 
invariably  appears  at  directors'  meetings  wearing  a  carnation  in 
his  buttonhole. 

Perhaps  I  should  mention  that  the  sweater  ss  of  soil  and  fine 
material,  and  that  it  is  always  clean,  Mr.  Fox  explains  that  he 
wears  it  because  his  doctor  has  told  him  to  keep  his  shouWrrs 
warm.  As  to  the  white  socks,  he  points  out  that  they  are  free 
from  dye  and  naturally  more  healthful,  and  that  they  offer  less 
danger  of  infection. 

Since  this  is  not  a  treatise  on  hygiene,  I  content  myself  wuh 
remarking  that  when  the  directors  of  a  corporation  are  selected 
for  the  color  of  their  socks  and  the  flowers  in  their  buttonholes, 
it  is  certainly  time  for  the  stockholders  of  that  corporation  ^to 
look  out  for  their  own  interests ;  which  proved  to  IK  the  case  with 
Fox  Film  and  Fox  Theatres. 

In  the  breast  pocket  of  the  blue  coat,  or  the  brown  one,  there 
is  a  row  of  long  brown  cigars,  each  wrapped  in  cellophane.  At 
the  outset  of  our  session,  my  subject  draws  out  one  of  these 
cigars,  tears  off  the  wrapper  and  rolls  it  into  a  little  bat!  and 
deposits  it  carefully  in  the  ash  tray;  if  it  rolls  off,  he  picks  it  up 
from  the  floor — from  which  you  may  conclude  that  he  has  befit 
well  drilled  by  thirty-two  years  of  domestic  life.  He  lights  the 
cigar  and  puffs  it  meditatively  for  a  while,  theft  he  starts  lo  talk, 
After  a,  few  minutes,  the  cigar  goes  out,  and  he  strikes  a  match, 
lights  it  again,  gives  a  few  more  puffs,  and  then  forgets  it  again, 
This  continues  all  through  our  session  of  three  or  four  hours,  and 
at  the  end  the  cigars  are  gone  from  the  pocket  and  the  stubs  are 
in  the  ash  tray. 

Our  subject  has  many  funny  stories,  and  enjoys  telling  them. 
One  records  how  he  was  temporarily  cured  of  the  tobacco  habit 
by  no  less  a  personage  than  Carry  Nation*  It  appears  that  at  the 
height  of  her  hatchet-wielding  career,  the  old  lady  from  Kansas 
visited  New  York,  and  William  Fox  engaged  her  for  a  thret-a- 
day  vaudeville  performance  at  a  salary  of  $3,000  a  week*  She 
was  a  great  hit,  and  everything  was  lovely,  until  she  came  into 
the  office  of  the  theatre  magnate.  Says  the  magnate; 

"When  I  was  introduced,  I  took  the  cigar  out  of  my  motithf 


CLOSE-UP  3 

and  four  huge  cigars  which  were  in  my  pocket  were  visible  to 
the  eyes  of  Mrs.  Nation,  I  said  I  was  pleased  to  meet  her.  She 
said ;  'I'm  not  pleased  to  meet  you  at  all*  I  will  not  appear  on 
that  stage  again.  I  will  not  work  for  a  man  who  is  an  habitual 
tobacco  fiend/  Of  course,  I  was  shocked  at  the  idea  of  losing 
our  stage  performer,  so  I  said  that  I  would  quit  smoking.  She 
said  1  couldn't  ever  stop  smoking,  I  said :  *I  give  you  my  word 
I  will  never  light  another  cigar  for  twelve  months/  I  threw  the 
rest  of  my  cigars  away,  and  Mrs.  Nation  resumed  her  lecturing. 
I  ate  more  candy  in  the  first  three  of  those  twelve  months  thaa 
ever  before,  and  it  was  not  until  November  17,  1910,  that  I  again 
had  a  cigar  in  my  mouth ;  hut  I  have  had  one  there  ever  since/* 

IJttJe  Will  Fox  grew  up,  as  you  shall  presently  hear,  in  a  rear 
tenement  on  the  East  Side  of  New  York*  He  left  school  and 
went  to  work  to  help  support  his  brothers  and  sisters  at  the  age 
of  eleven.  Therefore,  you  will  not  be  surprised  if  I  tell  you  that 
he  is  not  always  impeccable  in  his  use  of  the  English  language. 
Sometimes  when  he  is  not  on  his  guard,  he  will  say*  "I  seen  it/* 
or,  "I  done  it,"  and  frequently  he  will  mix  a  tense  or  a  declension. 
A  person  who  spends  a  good  part  of  his  life  in  the  study  of  words 
notices  these  things;  but  1  take  them  as  part  of  the  local  color 
of  an  East  Side  boy.  It  may,  however,  have  seemed  different  to 
the  elegant  arid  cultured  New  York  bankers  with  the  carnations 
in  their  buttonholes;  children  of  Fifth  Avenue  in  its  old  fash- 
ionable days,  or  of  Madison  Avenue  with  its  dignity  and  reserve ; 
boys  who  had  been  to  Groton  and  St.  Mark's,  and  then  to  Har- 
vard or  Princeton  or  Yak,  They  would  invite  this  grown-up 
East  Side  Jewish  boy  to  luncheon  at  the  Bankers*  Oub  or  to 
dinner  at  the  Metropolitan  Club  for  business  conferences,  but 
their  wives  would  not  appreciate  him,  and  he  would  never  belong* 
to  their  inner  circle  of  fashionable  culture.  I  have  been  in  those 
circles  on  a  few  occasions,  and  can  hear  the  matrons  whispering 
over  their  teacups,  and  the  old  dowagers  tittering1  while  the  cards 
are  being  dealt  at  bridge.  **My  dear,  can  you  imagine — he  says 
insipid  when  he  means  insignificant  'The  amount  is  too  insipid 
to  be  discussed!*1* 

I  came  to  New  York  at  the  age  of  eight  or  nine  and  went  to 
a  public  school  on  the  East  Side,  and  played  with  a  swarm 
boy®  just  like  little  Wffl  Fox,  so  I  know  every  tone  of  Ms 


4         UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

and  every  peculiarity  of  his  accent.  We  New  York  boys  said 
"becauss" ;  we  said  "seccatary,"  If  we  had  occasion  to  use  such 
a  long  word.  Wishing  to  convey  to  you  our  manner  of  swallow- 
ing our  consonants,  I  pick  one  phrase;  **a  thousan'  'ollas.'*  lou 
must  say  that  phrase  rapidly,  with  your  mind  upon  the  supreme 
importance  of  the  "thousan*  'ollas,"  the  things  you  could  do 
with  it  if  you  could  get  it  There  were  no  movies  in  those  ^days, 
but  they  came  before  long,  and  we  called  them  "fiH-ums."  To 
me  this  word  is  touched  with  the  hues  of  romance!  the  emotional 
tone  which  attaches  itself  to  events  of  our  lives  as  they  recede 
into  the  mists  of  the  distance.  It  may  be  that  I  met  little  Will 
Fox  in  those  far-off  golden  days.  He  used  to  sell  candy  in 
Central  Park,  and  I  used  to  play  all  over  that  park,  and  many 
times  bought  candy  in  little  packages  wrapped  in  pink  and  blue 


thing  as  a  "passenger" 

there  be  such  a  thing  as  a  "Iozenger'7  Of  course!  ^ 

Maybe  I  paid  him  a  penny,  and  maybe  he  took  it  home  and 
dropped  it  into  his  little  tin  bank;  presently,  after  a  month  or 
two,  there  was  a  dollar  or  more,  and  he  took  it  and  ptit  it  in  a 
savings  bank  at  3  per  cent.  Presently  there  was  $100»  and  he  was 
a  capitalist,  ready  to  engage  in  business  ventures*  Some  of  these 
ventures  were  funny  and  some  of  them  were  tragic,  but  all  of 
them  are  full  of  the  spirit  of  New  York,  of  the  desperate  urgency 
to  get  ahead,  to  climb  out  on  top. 

William  Fox  never  played  and  he  seldom  rested.  He  learned 
to  work  all  day  and  most  of  the  night,  and  to  sleep  in  snatches 
when  he  could,  and  he  came  out  of  it  with  a  strong  constitution 

v  and  the  energy  of  a  great  dynamo* 

V    "Mr.  Sinclair,  he  was  a  slave,"  said  Mrs.  Pox ;  "and  the  only 

/way  I  could  ever  have  a  husband  was  to  go  and  be  a  slave  with 
him.  We  hardly  ever  got  home  from  the  studio  before  3  o'clock 
in  the  morning,  and  the  canary  bird  Jn  our  home  adjusted  iff 
hours  and  sang  for  us  at  whatever  hour  we  returned/* 

He  knew  every  detail  of  his  business,  no  matter  how  vast  it 

\became.  He  knows  it,  no  matter  how  far  back  into  the  distance  it 
recedes.  He  can  tell  you  how  much  money  he  made  in  the 
"lozenger"  business,  and  how  much  he  stood  to  lose  when  hit 


CLOSE-UP  5 

sandwich  business  was  ruined  by  a  wind  storm  on  the  day  of 
Admiral  Dewey's  welcome  to  New  York.  He  knows  the  price 
he  paid  for  every  theatre  in  the  Fox  Theatres  chain,  and  how 
much  Mrs.  Fox  spent  for  the  decorations.  He  knows  these 
things  as  !  know  the  contents  of  each  of  my  forty  volumes,  and 
how  many  copies  they  sold.  I  quote  his  own  statement ; 

"My  business  career — I  was  as  devoted  to  it  as  you  are  to 
your  literary  careen  For  more  than  thirty  years  1  avoided 
carrying  a  watch.  I  never  wanted  to  know  what  time  it  was. 
My  day  ended  when  my  day's  work  was  completed.  Again  and 
again,  I  didn't  go  to  bed  at  all  during  the  twenty- four  hours. 
There  was  work  to  do.  I  was  working  not  only  for  myself  but 
to  help  others.  I  had  an  ambition  to  build  this  monumental  insti- 
tution. From  a  humble  beginning,  from  a  scholar  at  school  who 
hated  geography,  !  had  developed  a  business  so  that  the  flag  of 
the  company  was  flying  in  every  civilized  and  uncivilized  country 
in  the  world.  My  affairs  were  so  organized  that  at  the  end  of 
the  day,  whenever  the  time  arrived,  there  was  never  a  pipce  of 
paper  on  my  desk  for  the  following  day. 

"I  was  acquainted  with  every  story  that  was  selected  by  my 
companies.  I  read  every  story  they  ever  produced,  I  made 
suggestions  in  the  majority  of  the  stories  produced  by  our  com- 
panies. In  the  early  years  1  wrote  most  of  the  scenarios*  No 
picture  ever  produced  by  the  Fox  Film  Corporation  was  per- 
mitted to  be  viewed  by  the  general  public,  until  every  title  it 
contained  had  been  approved  and  passed  by  me,  and  I  don't 
remember  a  single  picture  ever  made  by  the  company  that  the 
titles  contained  therein  were  not  corrected,  edited  and  rewritten 
by  me,  I  always  bragged  of  the  fact  that  no  second  of  those 
contained  in  the  twenty- four  hours  ever  passed  but  that  the  name 
of  William  Fox  was  on  the  screen,  being  exhibited  in  some 
theatre  in  some  part  of  the  world, 

**!  knew  the  condition  of  every  nation  we  traded  with,  I  knew 
the  value  of  every  currency  of  every  nation  we  traded  with. 
I  thought  I  knew  the  politics  of  every  nation  we  traded  with.  No 
question  could  arise  that  by  a  push  of  a  button  could  not  be 
answered  from  the  extensive  files  that  I  had  adjoining  my  office. 
I  had  it  completely  systematized,  so  that  I  knew  every 
that  was  made  throughout  the  organisation. 


6         UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"The  number  of  theatres  controlled  by  the  companies  that  I 
was  at  the  head  of  in  the  United  States  alone  was  more  than  800. 
Early  each  morning  I  knew  the  exact  number  of  people  that 
attended  the  performances  the  day  before.  1  knew  the  number 
that  entered  that  building  every  hour,  and  just  as  soon  as  one 
o£  these  buildings  showed  the  slightest  inclination  towards  the 
falling  off  of  receipts,  I  was  able  to  send  for  the  executive  of  that 
theatre  and  rearrange  the  policy  to  prevent  it  from  making  a  km. 

"It  was  always  a  charge  that  the  Fox  organization  was  a  one- 
man  organization.  That  was  never  said  as  a  compliment  to  ;m% 
but  as  a  criticism.  They  were  right  when  they  said  that  It  is  a 
fact  that  if  all  the  executives  of  the  organization  gathered  to 
continue  the  business  in  case  I  died  or  became  disabled,  they  would 
have  had  a  problem  on  their  hands.  If  they  had  produced  the 
knowledge  that  each  had  and  pieced  it  all  together,  they  wouldn't 
have  understood  that  which  was  continuously  being  generated  in 
my  brain.  That  is  best  illustrated  in  the  fact  that  after  I  had 
sold  out,  and  the  bankers  captured  all  the  executives  of  the  cor- 
porations, the  business  crumbled,  disappeared  and  melted  away* 
They  provided  these  companies  with  millions*  but  the  mtUions 
were  of  no  avail." 

This  is,  you  perceive,  an  autocrat  speafckg.  We  Irre  intidef 
an  industrial  autocracy,  and  get  our  work  done  that  way*  Wllliiuw 
Fox  was  called  egotistical ;  but  my  feeling  Is  that  if  a  ffl&n  CM 
do  something,  he  generally  knows  that  he  can  do  it,  and  It  is 
sensible  for  him  to  say  so,  and  hypocrisy  not  to  say  so.  If  you 
had  asked  Napoleon  if  he  knew  how  to  command  an  army,  he 
would  have  answered  just  as  William  Fox  answered  If  you 
should  ask  Bernard  Shaw  if  he  knows  how  to  write  a  play,  you 
would  get  the  same  sort  of  response. 

Worry  and  strain  have  made  William  Fox  impatient:,  and 
delay  and  obstructions  are  intolerable  to  Mm.  Mr.  Benjamin 
Reass*  his  fidus  Achates,  is  the  kindest  and  sweetest  little  gentle- 
man who  erer  practiced  corporation  law  in  New  York,  but  hit 
mind  is  not  geared  to  the  terrific  tempos  of  the  FOK  dynamo* 
Sometimes  he  is  asked  for  a  name  or  a  date ;  or  perhaps  he  is 
required  to  produce  a  dopy  of  Fox  Theatres  balance  sheet  f0r 
I928y  and  he  is  sure  it  is  down  at  the  hotel,  while  feis  employer 
thinks  it  is  in  the  suitcase  on  the  table*  When  these  two  {pet  t«t*> 


CLOSE-UP  7 

an  argument,  it  is  exactly  as  if  they  were  married.  "Ben,  dear!" 
Mr,  Fox  exclaims,  and  the  amount  of  emphasis  on  the  "dear"  is 
proportioned  to  the  intensity  of  his  irritation. 

He  has  a  keen  sense  of  humor,  and  a  quick  mind  which  gets 
instantly  whatever  you  say.  Now  and  then  in  his  narrative  I 
interpose  some  remark,  perhaps  a  bit  of  sarcasm  bom  of  my 
inside  knowledge  of  the  big  business  game ;  he  favors  me  with  a 
glance,  a  twinkle  of  the  eye — and  then  repeats  my  words  so  that 
they  will  go  into  the  record.  His  face  is  mobile  and  expressive, 
and  I  get  a  good  part  of  his  story  there.  He  begins  quietly,  speak- 
ing in  measured  tones  for  the  benefit  of  the  stenographer.  Some- 
times he  goes  on  like  that  for  an  hour,  recording  figures  and 
facts ;  but  then  comes  some  part  of  his  story  which  appeals  to  bis 
sense  of  humor,  and  his  face  wears  a  schoolboy  grin ;  or  he  is 
exposing  some  rascality,  and  his  lips  curl  with  scorn.  Warming 
up  to  his  job,  he  gets  up  and  begins  to  pace  back  and  forth.  We 
have  to  arrange  the  furniture  so  that  he  has  a  stamping  ground, 
and  will  not  upset  the  little  stand  with  the  cigar  ashes  and  the 
glass  of  water. 

His  voice  rises.  He  is  in  the  presence  of  his  enemies,  and  he 
clenches  his  hands,  and  you  think  of  him  as  a  creature  more 
dangerous  than  a  fox,  He  talks  more  rapidly — until  suddenly 
he  stops  and  glances  at  the  stenographer  and  says,  "Too  fast, 
young  lady  ?" — but  soon  he  is  going  on  as  fast  as  ever-  When  his 
fighting  mood  is  roused,  he  orates  to  our  HttJe  company  of  three 
as  if  we  were  the  16,000  stockholders  of  Fox  Film  and  Fox  The- 
atres— or  perhaps  the  hundreds  of  taUIioos  of  Fox  patrons  all 
over  the  world. 

!  pointed  out  to  him  that  if  I  was  to  make  a  real  job  of  this 
book,  he  must  think  of  me  as  a  family  lawyer,  about  to  defend 
him  in  a  libel  suit  which  involved  his  whole  career,  and  in  which 
his  enemies  would  have  the  right  to  put  him  on  the  stand*  I 
asked  him  every  question  I  could  think  of,  and  he  answered 
without  hesitation*  He  took  me  into  the  intimacies  of  his  family 
life  and  told  me  his  griefs  and  agonies*  He  invited  me  to  meet 
his  wife,  and  I  questioned  her  for  six  hours,  everything  about 
husband  from  their  first  meeting  when  she  was  ten.  Six 
was  too  long  for  politeness,  but  I  forgot  the  time, 
like  her  husband  whea  I  have  a  job  to  do- 


8         UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

He  is  a  man  of  intense  feeling,  and  it  was  an  ordeal  to  htm 
to  live  over  again  that  series  of  agonies-  Many  times  his  voice 
trembled,  and  once  he  broke  down  completely.  He  was  telling 
me  about  the  sufferings  of  his  wife  at  the  height  of  his  trouble. 
She  had  been  grievously  ill  out  at  their  home  on  Long  Island, 
and  he  was  kept  in  the  city  day  and  night  for  many  weeks, 
getting  only  a  couple  of  hours'  sleep  out  of  twenty-four.  It  was 
at  one  of  the  most  desperate  moments  of  his  struggle,  he  thought 
he  was  ruined,  and  was  all  but  overwhelmed  by  the  mass  of 
slanders  which  had  been  poured  out  upon  him.  He  was  ill,  and 
so  came  the  anniversary  of  his  wedding,  which  happens  to  be 
also  his  birthday  and  the  birthday  of  the  new  year.  He  went 
home,  and  when  he  told  me  of  his  wife,  and  how  she  appeared* 
and  what  happened  between  them,  his  voice  tegan  to  break,  and 
he  began  sobbing,  and  had  to  walk  up  and  down  for  a  long  time 
to  get  himself  together. 

Afterwards  he  was  ashamed  of  this,  and  apologised ;  but  I 
told  him  that  I  also  had  had  troubles,  some  of  which  I  would  not 
care  to  rehearse.  As  a  matter  of  fact,  although  I  am  of  Anglo- 
Saxon  descent,  I  am  more  like  the  Jews  in  my  willmgncss  to  tell 
my  troubles.  I  have  put  them  into  books,  and  the  reserved  and 
aloof  Anglo-Saxon  critics  have  rebuked  me  sternly.  But  if  seems 
to  me  that  we  don't  stay  so  long  in  this  mysterious  world  t  and 
possibly  are  not  of  such  importance  as  we  think.  If  we  can  help 
one  another,  and  inform  and  guide  one  another,  by  telling  our 
blunders  and  the  penalties  we  have  paid  for  them— that  is  far 
better  than  locking  ourselves  up  in  an  ivory  tower,  and  con- 
templating the  image  of  our  own  dignity. 

When  William  Fox  is  in  repose,  the  lines  of  his  face  drop 
down,  and  you  see  that  he  is  a  tired  and  stricken  man.  The 
memory  of  his  long  ordeal  haunts  him  and  goads  him.  He  has 
lost  the  one  thing  in  his  life  which  stood  first  to  him,  and  try  as 
he  will,  he  cannot  make  anything  else  take  its  place*  He  teUs  me 
that  he  found  bis  first  happiness  in  telling  his  story  to  me*  He 
takes  me  not  merely  as  a  father  confessor,  but  as  a  judge  who 
will  set  him  right  to  the  world,  I  told  him  that  he  overestimated 
my  power;  he  answered  that  he  had  come  to  me  because  he 
knows  me  to  be  an  honest  writer*  It  is  not  merely  that  he  wants 
his  name  cleared,  but  that  his  sense  of  justice  is  outraged;  he 


CLOSE-UP  9 

cannot  understand  how  such  a  monstrous  evil  as  a  credit  con- 
spiracy could  be  carried  through  in  America.  This,  of  course,  is 
what  appeals  to  me,  and  not  the  individual  misfortunes  and  suf- 
ferings of  William  Fox. 

"Mr,  Sinclair,"  said  tny  subject  at  our  first  meeting,  "I  want 
you  to  understand  that  this  is  not  a  hard-luck  story ;  I  have  more 
money  than  I  know  what  to  do  with."  And  that  was  not  boasting, 
but  a  statement  of  significance,  in  its  bearing  upon  the  mind  of 
my  subject,  and  also  upon  the  mind  of  America,  of  which  he  is  a 
part.  This  wary  and  hard-fighting  "Fox"— he  likes  to  play  with 
his  own  name— got  away  with  $20,000,000  of  his  enemies*  money; 
they  had  to  pay  that  in  cash  to  get  him  loose  from  his  properties. 
In  addition,  he  has  valuable  real  estate  in  many  cities,  and  talking 
picture  patents  which  may  some  day  make  him  the  richest  man 
in  the  world.  And  money  is  convenient ;  with  large  sums,  a  man 
can  provide  for  his  loved  ones  a  beautiful  home  in  the  country, 
and  one  in  the  city,  a  private  railroad  car  and  a  fleet  of  auto- 
mobiles.  But  still  William  Fox  is  not  happy*  I  had  some  photo- 
graphs taken  of  him  by  my  friend  Odiorne,  a  sleight-of-hand 
artist  who  keeps  you  entertained  and  busy,  and  changes  his  plates 
and  squeezes  his  bulb  so  fast  that  he  gets  your  moods  before  you 
know  you  have  them*  I  picked  one  of  these  portrait  studies, 
because  it  gives  you  the  sadness  in  its  subjects  face,  and  lets  you 
see  the  marks  of  the  conflict. 

When  William  Fox  is  in  the  bosom  of  his  family,  he  can 
forget  for  a  while ;  but  when  he  is  at  his  desk,  he  is  miserable, 
and  when  he  lies  down  to  sleep,  he  broods  over  the  thing  he  has 
lost,  and  to  which  he  gave  his  lifetime  and  name.  He  learned  to 
make  moving  pictures;  he  learned  to  manage  theatres  in  which 
these  pictures  could  be  shown ;  he  had  strings  of  these  theatres 
all  over  the  United  States.  He  had  distributing  agendas  ineytgt. 
country  in  the  world*  He  waft  tummg  ,out  &  motion  picture  every 
week  to  keep  these  theatres  busy  and  perhaps  a  hundred  million 
people  every  week  were,,seekig  Ks"  pn>dfK^*  and  payli^g  Wrii 
money  to  be  used  in  making  more  pictures*  and  in  buyin|  more 
theatres,  and  in  building  up  this  tremendous  entertainment 
machine. 

This  was  his  life.    It  was  hi*  work  and  Ms  pla^r  £fae 
sion  of  his  personality,    Presently  I  ttell  ahowjEQji  Bcrnaspd 


10       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Baruch  a  man  who  had  the  spending  of  some  $17,000^,000 
for  the  allies  during  the  World  War,  looking  over  the  nnancial 
statements  of  this  entertainment  machine  and  exclaiming;  "Why, 
this  is  a  pot  of  gold!"  It  was  too  rich  a  pot  to  be  left  in  the 
hands  of  one  man,  a  Jewish  boy  who  had  been  bora  m  a  ""aft? 
m  Htmgary  and  raised  in  a  slum  tenement  of  the  East  Side  of 
New  York,  There  gathered  around  him  the  elegant  and  cultured 
gentlemen  of  Wai!  Street,  with  the  carnations  in  their  buttcm- 
holes,  and  they  put  a  whole  battery  of  machine  guns  against  his 
head,  and  held  him  up  and  took  away  from  him  the  control  of 
that  business.  When  they  took  it  over,  it  represented  a  book 
value  of  two  or  three  hundred  million  dollars.  They  looted  it  of 
more  than  a  hundred  million  in  two  years,  and  haw  brought  it 
to  a  condition  where,  as  I  write,  its  value  is  abotit  $10IDOO»000> 
and  bankruptcy  is  just  around  the  comer, 

WiHiam  Fox  sits  with  the  recent  financial  statawwts  of  the 
Fox  Film  Corporation  and  the  Foot  Theatres  Corpon^ioii  m  Ml 
hands,  and  on  h5s  face  is  that  look  of  grief.  He  finds  so  maliciow 
pleasure  in  the  fact  that  his  enemies  have  been  unable  to  rtm  bis 
machine.  On  the  contrary,  his  voice  trembles*  and  there  Is  a 
trace  of  tears  in  his  eyes,  "Look,  Mr.  Sinclair!  Just  todkl'1— mA 
he  shows  me  how  the  surpluses  have  disappeared,  mad  kys  fotre 
the  tricks  by  which  rascalities  have  been  hidden. 

There  is  another  aspect  of  William  Fox  which  must  not  be 
overlooked,  and  that  is  his  religion.  He  comes  back  to  it  again 
and  again.  He  is  not  an  orthodox  Jew,  but  has  "sublime  faith 
in  God,"  and  believes  in  the  direct  guidance  of  Providence.  He 
told  me  how,  when  he  was  a  cWld,  and  when  the  Fox  family 
was  hungry,  an  old  butcher  trusted  little  Will  for  meat,  and  how 
Kttite  Win  promised  to  repay  him  by  taking  care  of  him  in  his  did 
age,  and  carried  out  that  promise.  After  telling  me  this  story, 
the  grown-up  Will  added:  "Do  you  mean  to  tell  me  that  Gad 
dlAoft  give  the  butcher  the  idea  to  give  me  that  meat  because  He 
knew  that  he  was  going  to  be  taken  care  of?  That  was  God*i 
way/' 

The  present-day  William  Fox,  of  course,  understands  thmt 
this  point  of  view  is  considered  out  of  date  among  the  intelligent- 
sia* He  suspected  that  I  would  not  share  his  tfaeol<v  ^ ,  and  per- 
sisted in  impressing  it  upon  me-  Said  he : 


CLOSE-UP  1 1 

"During  any  calamity  that  befell  me,  it  always  was  made  clear 
to  me  that  it  wasn't  any  ability  that  I  possessed  that  straightened 
me  out  again,  but  it  was  God  Himself  who  came  to  my  rescue. 
At  the  time  when  my  enemies  had  me  down,  I  read  the  Bible* 
and  by  the  passages  1  came  upon  it  was  clearly  indicated  to  me 
that  He  who  wrote  this  Bible  foresaw  what  was  going  to  happen 
to  me,  and  saw  how  it  was  going  to  come  out ;  that  there  was 
nothing  new  in  this  bankers1  crusade  to  take  my  business  away 
from  me.  Perhaps  there  was  not  a  description  of  my  particular 
case,  but  a  general  description.  I  think  the  Bible  shows  you 
clearly  what  you  ought  to  do  and  how  to  save  yourself,  I  intend 
to  show  you  passages  that  gave  me  a  clear  vision  that  my  diffi- 
culties would  come  straight  in  the  end.  Of  course,  I  presume 
God  knows  which  side  is  right," 

Setting  aside  questions  of  external  fact,  and  considering 
merely  those  of  psychology,  it  is  obvious  that  a  man  who  goes 
out  to  do  battle  in  the  world,  convinced  that  he  has  God  behind 
him,  guiding  his  destiny — such  a  man  will  be  a  more  formidable 
foe  than  one  who  relies  upon  his  own  powers  alone.  It  will  be 
less  easy  to  discourage  him;  and  the  New  York  bankers  who 
undertook  to  plunder  William  Fox  may  be  interested  to  know 
why  he  proved  so  tough  and  tenacious,  Oddly  enough,  Mr- 
Harley  L*  Clarke,  the  Chicago  utilities  magnate  who  took  over 
his  properties,  considers  himself  a  devout  Christian  Scientist, 
and  so  one  branch  of  theology  was  pitted  against  another. 

I  would  hesitate  to  deprive  any  warrior  of  his  shield  and 
buckler,  m  the  questions  !  asked  William  Fox  were  intended  not 
to  weaken  his  faith  in  a  persona!  Providence,  but  merely  to  make 
him  plain  to  you*  He  explained: 

**The  mere  fact  that  a  man  prays  to  accomplish  a  thing  that 
is  wrong — he  is  just  wasting  his  time  to  expect  God  to  hdp  him 
in  that  That  is  fair  to  assume,  isn't  it?  Wall,  as  I  have  been 
taught*  He  likes  the  idea  of  your  believing  in  Him  and  praying 
to  Him  and  praising  Him,  He  never  can  hear  too  much  of  that/' 

I  asked  whether  this  idea  of  God  did  not  seem  to  involve  a 
certain  human  weakness  in  His  personality,  a  desire  to  have  the 
attention  of  human  beings.  The  answer  was ; 

'Well,  I  don't  think  praise  in  that  sense,  as  you  have  Just 
described  it,  is  the  praise  God  expects.  Hie  praise  that  a 


12       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

expects  is  vanity,  I  don't  think  God  is  vain,  and  !  don1!  think 
that  Is  the  reason  He  likes  to  have  you  praise  Him,  Two  men 
are  in  a  business  deal,  the  one  perfectly  honest  and  the  other  a 
thief,  I  consider  the  prayers  of  the  thief  in  vain.  1  would  like 
to  give  you  proof  that  there  is  a  Supreme  God,  and  that  when 
you  pray  to  Him  to  give  you  the  right  thing,  He  helps  you.  1 
have  had  very  conclusive  proof  of  it  in  my  life.'1 

I  pointed  out  that  controversies  in  men's  affairs  are  same- 
times  complicated.  There  is  right  and  wrong  on  each  side,  and  it 
might  be  a  little  difficult  for  even  God  to  make  a  choice.  But 
William  Fox  would  not  have  it  so, 

"One  man  in  the  deal  almost  always  knows  he  is  wrong. 
Where  we  all  get  confused  in  this  religious  subject  is  that  some- 
times you  are  right,  and  you  pray  to  God  to  help  you  get  out  of 
difficulties,  and  He  doesn't,  and  you  think  your  prayer  hasn't 
been  answered,  I  prayed  the  Lord  not  to  let  these  men  take  my 
business  away  from  me,  I  felt  at  that  time  that  God  had  not 
answered  my  prayer.  But  I  wait,  and  a  year  or  two  later  I  find 
that  it  was  answered.  The  average  fellow  that  sits  down  and 
prays,  says:  'Well,  I  prayed  this  morning,  but  I  didn't  get  any 
answer  this  morning'— he  may  get  it  later.  If  Harley  L.  Qarke 
and  I  both  prayed  at  the  same  time,  the  day  he  bought  me  out 
of  business  he  said,  Thank  you,  dear  God,  You  haw  an&wettd 
my  prayer1 ;  and  I  probably  said,  'Dear  Qod,  1  have  prayed  hard, 
and  here  You  have  destroyed  me,  You  have  taken  this  thing  I 
have  built  up,  and  given  it  to  Harley  L,  Clarke.*  But  two  years 
later  we  find  Fox  in  comfort,  while  Qarke  is  entirely  mined* 
having  started  out  with  the  wrong  Idea  in  his  mind*  When  we 
look  back  now,  we  see  God  answered  the  right  prayer/' 

For  myself,  I  cannot  claim  to  know  enough  about  this  uni- 
verse to  make  assertions  about  its  moral  purposes  and  ultimate 
causes.  But  William  Fox  has  his  opinions,  which  are  of  great 
importance  to  him,  and  therefore  are  part  of  his  story* 

So  you  see  him,  a  serious  man,  who  will  produce  serious  and 
moral  pictures,  such  as  "A  Foo!  There  Was/'  "Thou  Shalt  Not 
Steal/'  "The  Walls  of  Jericho,"  and  "The  Honor  System*1 ;  also 
sentimental  pictures  such  as  "My  Mamie  Rose/'  and  "Mother 
Machree"  and  "Mother  Knows  Best/'  and  "Over  the  Hill"  to 
touch  the  people's  hearts  and  moral  feelings.  He  will  «mke  it  t 


CLOSE-UP  13 

rule  of  his  company  that  any  rabbi,  priest,  or  clergyman  may  have 
any  Fox  film  free  of  charge  at  any  time  for  showing  in  any 
synagogue,  church  or  Sunday  school,  any  hospital,  orphan  asylum, 
or  home  for  the  aged.  He  will  dream  a  wonderful  dream  of  hav- 
ing the  twelve  greatest  preachers  preach  their  greatest  sermons 
before  a  sound  apparatus,  and  having  these  reproduced  in  a 
hundred  thousand  churches  all  over  the  world.  He  will  not  often 
please  the  highbrows  and  the  art-for-art's  sakers;  neither  will  his 
name  ever  be  whispered  in  connection  with  any  of  the  numerous 
female  stars  he  employs.  On  the  contrary,  he  will  be  a  family 
man  and  a  good  citizen,  a  Republican  in  national  affairs  and  a 
Democrat  in  New  York  City  affairs,  and  he  will  raise  millions 
for  the  Red  Cross  in  war  time,  and  give  away  millions  of  his  own 
money  in  peace  time— he  will  assert  that  throughout  his  whole 
life  he  has  given  20  per  cent  of  his  working  time  and  not  less  than 
20  per  cent  of  his  earnings  to  the  service  of  others. 


REEL  TWO 
SHOE-BLACKING  AND  LOZENGERS 

WILLIAM  FOX  was  born  in  the  village  of  Tulchva  in 
Hungary.  His  parents  were  of  German  descent.  His  father 
ran  a  general  merchandising  store,  and  as  a  side  line  he~  extracted 
J£gj|i.  He  advertised  that  he  was  a  painless  dentist,  guaranteeing 
that  no  one  would  feel  the  pain  of  tooth  extraction.  The  patient 
would  sit  in  a  chair  and  strip  himself  to  the  waist,  and  at  the 
crucial  moment  someone  would  touch  him  with  a  hot  iron  on  the 
bade,  and  this  would  be  so  painful  that  the  extraction  of  the 
tooth  would  not  be  noticed.  When  he  came  to  America,  he  was 
not  permitted  to  practice  this  form  of  dentistry,  but  he  kept  the 
extracting  instruments,  and  his  son  often  saw  them. 

Little  Will  never  saw  the  village  in  which  he  was  born, 
because  his  mother  brought  him  to  America  at  the  age  of  nine 
months.  He  has  never  revisited  the  place,  but  years  ago  he  sent 
*a  cameraman  to  take  moving  pictures  of  it,  and  invited  his  family 
and  friends  to  a  showing.  It  was  forty-eight  years  after  the 
elder  Fox  had  left  the  village,  but  he  said  that  it  looked  exactly 
the  same,  there  had  not  been  a  new  house  built. 

^herdd-er -Eoxxam-e  to-  America  to  look  for  his  brother,  who 
had  come  over  ten  years  previously,  and  had  suddenly  stopped 
writing.  Th&  father  searched  for  him  in  America  for  ttt&ny 
years,  but  never  found  him,  and  never  learned  what  had  happened 
to  him.  The  father  found  it  possible  to  earn  a  living  in  America, 
so  the  mother  sold  the  merchandising  business  and  brought  her 
baby  to  this  new  world.  There  she  gave  birth  to  twelve  other 
children,  of  whom  two  boys  and  three  girls  are  now  living.  The 
father  learned  the  trade  of  machinist,  and  worked  at  it  until 
William  Fox  arrived  at  manhood.  During  all  this  period,  his 
earnings  were  never  more  than  a  thousand  dollars  a  year. 

The  first  home  that  little  Will  remembers  is  a  place  on  Stanton 

14 


SHOE-BLACKING  AND  LOZENGERS  15 

Street  between  Columbia  and  Sheriff,  adjoining  the  Sheriff  Street 
public  school.  Little  Will  attended  that  school  from  the  age  of 
six.  The  home  was  in  a  rear  tenement,  an  extra  building  stuck 
on  the  back  part  of  the  lot,  excluding  almost  all  the  light  and  air. 
What  little  yard  was  left  had  a  tall  pole  in  the  center  of  it,  and 
to  this  pole  there  were  pulleys  attached,  and  from  the  windows 
of  each  tenement  ran  clotheslines,  and  from  these  clotheslines 
dangled  the  sheets  and  bedding  of  the  Fox  family  and  the  shirts 
and  underclothing  of  little  Will.  The  toilet  was  downstairs  and 
so  was  the  pump,  and  the  family's  water  had  to  be  carried  up  in 
buckets.  I  can  recall  visiting  such  tenements  in  my  boyhood, 
because  we  had  our  washing  done  there  and  our  clothes  dried  by 
this  device  of  pulleys  and  ropes,  and  sometimes  we  would  go 
there  to  seek  a  new  washerwoman. 

I  arrived  in  this  world  103  days  ahead  of  William  Fox,  and 
if  I  seem  to  take  charge  of  him  in  this  book,  you  may  attribute 
It  to  this  advantage  of  seniority.  We  exchanged  reminiscences  of 
old  days  in  New  York,  and  one  of  them  was  the  blizzard  of  1888. 
I  remember  the  snow  drifted  up  to  the  second  story  windows, 
and  romping  in  these  drifts  with  my  father  and  being  thrown  in. 
head  first.  What  little  Will  remembers  is  that  at  that  time  his 
father  was  out  of  a  job,  and  had  conceived  the  idea  of  support- 
ing his  family  by  manufacturing  stove  blacking  in  the  home.  It 
was  Will's  job  to  trudge  up  and  down  the  stairs  of  tenements, 
tapping  on  doors  and  selling  stove  blacking  to  his  customers  at 
5  cents  per  can.  To  have  the  stove  well  blacked  was  important 
to  the  family  dignity,  because  the  kitchen  served  as  the  dining 
room,  and  also  as  a  reception  room  for  guests.  As  a  rule,  there 
was  an  inside  bedroom  or  possibly  two  of  such.  For  a  year  and 
a  half  little  Will  had  been  selling  stove  blacking,  and  now  at  the 
age  of  nine  the  blizzard  put  an  end  to  his  business,  because  it 
was  a  week  or  more  before  a  little  boy  could  travel  about  the 
streets. 

So  then  came  the  business  of  selling  "lozengers,"  1  cent  a 
package,  or  six  for  5,  with  a  riddle  inside  each  package.  A 
good  place  to  sell  them  was  at  the  foot  of  the  Third  Street  dock, 
where  the  excursion  boats  used  to  leave.  Afterwards,  when  you 
had  built  up  the  business,  you  could  afford  ten  cents  car-fare  to 
take  you  up  to  Central  Park  and  back.  The  child  is  father  to 


16       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

tie  man,  and  you  will  see  little  Will  at  the  age  of  ten  fore- 
shadowing the  great  captain  of  industry.  He  has  enlisted  the  aid  . 
of  boys  in  the  neighborhood  in  the  lozenger  business.  These  boys 
have  no  capital  to  buy  lozengers,  but  Will  furnishes  the  capital 
and  pays  them  a  commission  on  their  sales.  So  now  he  is  a  con- 
tractor, with  a  string  of  boys  under  his  orders. 

The  business  was  a  nuisance  in  the  parks,  because  the  people 
would  throw  away  the  pink  and  green  and  blue  wrappers  of  the 
lozengers;  so  the  Park  Department  decided  to  do  away  with  the 
peddling.  But  somehow  they  failed  to  convey  notice  of  this 
decision  to  the  kid  contractor  on  Stanton  Street.  What  they  did 
was  to  send  policemen  one  day  and  arrest  all  the  peddlers.  This 
included  the  troop  of  Will  Fox,  and  because  they  had  no  money 
for  bail,  they  were  kept  all  night  in  the  station  house,  and  next 
day  made  their  appearance  in  the  57th  Street  Magistrate's  Court. 
The  parents  of  the  other  boys  had  obtained  attorneys  to  repre- 
sent them,  but  the  elder  Fox  did  not  know  what  to  do,  since  no 
member  of  his  family  had  ever  been  arrested  before;  so  he 
brought  his  family  physician  with  him. 

One  by  one  the  parents  were  summoned  before  the  magis- 
trate, and  one  by  one  they  stated  that  they  hadn't  known  what 
their  boys  were  doing.  It  had  been  the  contractor  who  employed 
the  boys  and  was  responsible.  "The  contractor/'  always  "the  con- 
tractor." So  finally  the  magistrate  said,  "Let's  have  this  contrac- 
tor here/*  The  answer  was,  the  contractor  was  before  him.  The 
magistrate's  desk  was  high,  and  he  had  to  rise  up  and  peer  over 
-the  top  to  see  the  tiny  figure  of  Will  Fox  gazing  up  at  him.  He 
took  one  glance,  and  then  said :  "Case  dismissed.  Go  home  and 
keep  out  of  the  parks."  Little  Will  went  home,  and  after  that 
he  kept  out  of  the  parks — when  the  police  were  looking.  The 
business  was  an  important  one,  for  during  the  summertime  he 
would  earn  as  much  as  $10  or  $12  a  week. 

At-  the^age  of  eleven,  little  Will  quit  school  and  took  a  job 
with  a  clothing  1ite^He,contMtted  at  night'  school  until  he  was 
fourteen.  But  there  were  some  kinds  of  education  wHch  he  had 
decided  did  not  interest  him.  He  could  not  see,  for  example,  any 
use  in  geography — having  no  idea  that  some  day  he  would  have 
a  selling  agency  in  every  country  in  the  world,  and  would  need 
to  know  the  seating  capacity  of  the  theatres  in  Bangkok,  and  how 


SHOE-BLACKING  AND  LOZENGERS  17 

many  milreis,  rupees,  pesos  or  piastres  it  took  to  make  a  dollar. 
He  decided  that  what  he  needed  above  everything  else  was 
arithmetic.  He  would  have  to  do  that  in  his  head  and  do  it 
quickly.  He  became  so  expert  that  he  would  trade  answers  to 
questions  in  geography  for  answers  in  arithmetic. 

The  elder  Fox  was  orthodox,  and  sent  his  sons  to  the  "cheder" 
to  learn  Hebrew  and  religious  doctrine.  It  was  taught  by  a  little 
old  man,  sturdily  built,  about  sixty  years  of  age,  with  a  white 
beard;  he  was  severe  and  brutal,  and  if  a  boy  missed  an  answer, 
he  would  rap  him  with  a  walking  cane.  He  was  supposed  to  be 
representing  God,  but  little  Will  did  not  consider  this  a  Godlike 
method.  Class  was  conducted  in  the  German  language,  and 
Hebrew  texts  were  learned  by  heart  and  translated  into  German 
and  explained.  The  school  was  In  a  tenement-house  basement, 
the  teacher's  home,  and  there  were  twenty  or  more  boys  in  the 
class.  The  mature  William  Fox,  looking  back  upon  this  teacher, 
says :  "I  should  classify  him  as  a  very  stupid,  ignorant  man.  The 
only  thing  he  knew  was  what  he  was  trying  to  teach  his  scholars/' 

On  his  thirteenth  birthday,  the  orthodox  Jewish  boy  is  con- 
firmed, and  takes  his  sins  upon  his  own  conscience,  relieving  his 
father  of  this  burden.  On  his  thirteenth  birthday,  little  Will  had 
a  responsible  position.  He  was  working  for  the  clothing  firm  of 
D.  Cohen  &  Sons,  and  had  charge  of  cutting  the  linings.  There 
were  twelve  men  and  boys  working  under  him — in  short,  he  was 
foreman  of  the  lining-cutters.  He  was  tall  for  his  age,  and  he 
managed  to  get  by  by  saying  he  was  sixteen  years  old  and  acting 
the  part.  But  now  here  was  a  problem.  He  had  to  be  excused 
from  work  for  a  day,  and  if  he  stated  why,  all  Jewish  people 
would  know  that  he  was  only  thirteen  years  old.  So  he  decided 
that  it  was  necessary  for  him  to  become  ill,  and  two  days  ahead 
he  began  to  develop  a  sore  throat.  Mr.  Cohen,  a  tall,  stoop- 
shouldered  old  gentleman  with  a  grey  beard,  was  very  kind,  and 
took  an  interest  in  his  youthful  foreman,  and  Insisted  on  going 
out  and  buying  him  a  bottle  of  medicine,  and  seeing  that  he 
gargled  his  throat  with  it.  It  was  terrible  medicine,  and  little  Will 
did  not  enjoy  the  ordeal — nor  did  It  help  his  throat.  The  next 
day  he  was  much  worse,  and  so  the  boss  told  him.  to  stay  at 
home  and  rest  up. 

Quite  recently  the  grown-up  Will  met  in  New  York  a  man 


18       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

who  reminded  him  of  having  been  let  in  on  this  grave  secret: 
the  tailor  who  cut  the  little  grey  frock  coat  which  thirteen 
year  old  culprit  wore  in  the  synagogue  while  taking  his  sras  upon 
his  own  shoulders.  Presumably  the  sin  of  deceiving  his  kind  boss 
was  not  included  in  the  accounting,  because  this  deception  had 
been  practiced  two  days  previously,  and  would,  therefore,  rest 
upon  the  conscience  of  little  Will's  father,  who  did  not  know 
about  it  No  doubt  the  old  teacher  at  the  cheder  could  have  found 
somewhere  in  the  Talmud  a  text  covering  that  detail  of  casuistry. 

I  asked  for  a  description  of  Cohen's  place  of  business  and 
was  told:  "It  was  a  three-story  building.  There  was  no  elevator, 
and  only  a  hatchway  for  the  goods.  We  were  obliged  to  pull 
them  up  by  rope  and  that  was  not  an  easy  task  either.  Of  course 
there  was  no  telephone.  Orders  had  to  be  placed  in  person  or  by 
mail.  There  was  no  stenographer  or  typewriter.  AH  letters  and 
bills  were  written  by  pen  and  ink.  The  first  floor  was  the  sales 
room,  the  second  floor  the  stock  room,  and  the  third  floor  the 
cutting  room.  From  here  the  contractors  would  take  the  work 
out  to  their  shops  to  be  made  into  garments.  I  started  working 
there  when  about  eleven,  and  worked  until  I  was  fifteen.  The 
highest  wage  was  about  $8." 

This  was  his  life :  he  walked  to  work,  an  hour's  walk,  leaving 
his  house  at  6  in  the  morning;  he  worked  from  7  to  12,  took  thirty 
minutes  for  lunch,  then  worked  from  12:30  to  6:30,  and  then 
marched  home,  having  his  dinner  at  7 :30.  After  dinner  he  went 
to  the,  night  school  about  a  block  from  his  home.  Concerning  all 
this  he  says :  "I  was  reaching  for  a  goal,  and  I  enjoyed  every 
moment  of  it." 

The  reason  he  worked  so  hard  was  because  he  watched  his 
father,  and  was  dissatisfied  with  the  progress  his  father  was 
making.  The  father  had  remained  a  workingman,  and  was  con- 
tent to  remain  a  workingman'  all  his  life.  Says  the  son ; 

"My  father  was  perfectly  happy.  He  was  just  as  happy  when 
he  worked  as  when  he  didn't  work.  He  never  worried.  He  was 
very  proud  of  my  success.  But  long  before  I  had  reached  the 
point  of  success,  he  was  perfectly  happy  and  contented.  I  never 
heard  the  man  complaining  about  anything  in  my  life.  When  I 
came  home  and  told  him  that  the  butcher  and  baker  had  refused 
to  trust  us  any  more  during  the  period  he  was  out  of  work,  he 


SHOE-BLACKING  AND  LOZENGERS  19 

was  sure  that  tomorrow  would  be  all  right,  or  that  the  butcher 
and  baker  would  most  likely  change  their  minds." 

It  was  the  mother  who  did  the  worrying  for  the  family ;  you 
can  imagine  that,  bearing  thirteen  children  and  losing  seven  of 
them,  she  had  plenty  of  worrying  to  do.  During  the  out  of  work 
periods,  she  helped  to  support  the  family.  Her  occupation  was 
sewing  slippers  for  a  manufacturer  who  sent  them  to  the  home. 
It  was  because  of  her  and  through  her  teaching  that  the  oldest 
son  learned  to  carry  responsibility.  From  the  age  of  ten,  when 
he  began  to  earn  money,  he  helped  to  keep  the  family  in  comfort, 
and  has  done  that  now  for  forty-three  years,  though  I  could  not 
get  him  to  tell  me  much  about  it. 

As  a  boy,  Will  was  not  interested  in  religion ;  he  was  inter- 
ested in  making  money  and  getting  ahead.  But  his  father  was 
stern,  and  insisted  that  he  should  pray,  and  so  he  learned  to  pray. 
On  his  thirteenth  birthday,  he  was  greatly  impressed  by  the  con- 
firmation ceremony,  and  the  fact  that  he  was  taking  his  sins  onto 
his  own  conscience.  From  that  time  on,  he  did  his  own  praying, 
and  he  watched  the  results,  and  made  note  of  the  fact  that  when 
he  asked  God  for  anything,  God  always  gave  it  to  him — if  it  was 
a  good  thing  for  him  to  have.  If  God  didn't  give  it  to  him,  he 
knew  it  was  because  it  was  not  a  good  thing  for  him  to  have,  and 
so  he  stopped  praying  for  it.  God  gave  hy^a^deyoted  wife,  whow, 
has  been  his  helpmate  and  guide  for  more  than  thiTty^years.  ^God 
gave  him  two  lovely  daughters,  and,  in  due  course,  gave  each  of 
them  a  lovely  son.  God  gave  him  continuous  and  expanding  pros- 
perity, and  both  he  and  his  wife  proved  their  gratitude  by  being 
generous  to  their  relatives  and  friends,  and  charitable  to  the  poor. 

A  vital  part  in  the  life  story  of  William  Fox  is  the  story  of 
little  JEye^L^o.  It  was  an  odd  coincidence  that  a  Fox  should  have 
married  a  Lioness;  they  both  of  them  make  puns  upon  this 
coincidence.  I  shall  tell  you  much  about  Mrs.  Fox  as  we  go  on. 
I  have  to  tell  now  the  story  of  the  first  meeting  of  Will  and 
Eve  when  she  was  ten  and  he  was  fourteen.  It  seems  that 
Will's  mother  gave  a  party  for  her  children  on  Thanksgiving. 
They  had  moved  now  to  a  better  neighborhood  and  had  six  rooms 
in  a  tenement  on  Rivington  Street,  and  Will  no  longer  had  to 
carry  the  water  up  from  the  basement. 

Little  Eve's  father  was  a  clothing  manufacturer,  and  some- 


20       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

what  higher  in  social  station  than  the  German-speaking  machinist 
named  Fox.  But  she  came  to  the  party,  and  when  she  entered 
the  room,  she  was  introduced  to  a  number  of  splendid  young 
gentlemen  dressed  in  the  costumes  of  knights  and  courtiers  and 
Spanish  grandees,  hired  from  a  costumer's  in  the  neighborhood. 
It  was  tremendously  impressive  to  a  child,  and  she  seated  herself 
shyly  in  a  corner  and  gazed  with  wide-open  eyes  at  the  fairy- 
story  scene ;  when  suddenly  there  entered  a  ragamuffin  with  torn 
clothing  and  dirty  face  and  a  bootblack's  kit  over  his  shoulder. 
This  was  just  as  real  to  Eve  as  the  knights  and  courtiers  and 
grandees,  and,  of  course,  she  was  displeased  with  the  little  raga- 
muffin. When  he  presumed  to  come  up  to  her  and  start  shining 
her  shoes,  her  dignity  was  offended.  She  was  about  to  order  him 
away,  when  someone  whispered  into  her  ear  that  this  was  the 
son  of  the  host,  and  that  he  was  not  really  a  bootblack,  but  a 
foreman  of  lining-cutters.  As  for  this  foreman,  he  looked  over 
the  girls  in  their  pretty  dresses,  and  decided  that  there  was  only 
one  for  him,  and  he  has  not  changed  that  opinion  in  forty  years. 
When  he  was  fifteen,  Will  took  on  another  occupation.  He 
purchased  a  stock  of  umbrellas  and  kept  them  in  the  house,  and 
on  rainy  evenings'  lie  would  rush  to  the  theatres,  and  sell  his 
umbrellas  to  the  ladies  who  were  coming  out  and  did  not  want 
their  bonnets  and  clothing  ruined. 

Also  he  found  a  form  of  play — at  least  an  occupation  which 
was  at  once  play  and  work.  He  met  a  boy  somewhat  older  than 
himself,  who  suggested  the  idea  of  embarking  upon  a  theatrical 
career.  Will  had  become -a- devotee  of  the  drama;  he  had  made 
the  discovery  that  storekeepers  who  put  announcements  of  shows 
in  their  windows  got  a  couple  of  tickets  in  exchange,  and  if  they 
did  not  care  for  the  theatre,  would  sell  the  tickets  for  five  or  ten 
cents.  So  after  Will  quit  night  school,  he  would  go  to  the  theatre, 
and  he  and  Cliff  Gordon  watched  Weber  and  Fields,  the  burlesque 
comedians,  then  at  the  London  Theatre  on  the  Bowery,  and  they 
conceived  an  act  in  imitation  of  this  pair. 

Cliff  was  taller  than  Will,  and  a  little  cross-eyed,  but  a  very 
charming  boy.  He  played  Fields,  and  Will  played  Weber,  and  I 
asked  the  grown-up  Will  if  he  could  tell  me  any  of  the  jokes 
that  they  gave  in  those  performances.  Here  are  two  samples, 
which  you  may  judge  for  yourself : 


SHOE-BLACKING  AND  LOZENGERS  21 

Said  Will :  Someone  wanted  to  buy  my  blind  horse. 

Said  Cliff :  No  one  would  buy  that. 

Said  Will:  Why  do  you  say  that?  Ikey  offered  me  $200  for 
him  yesterday. 

Said  Cliff :  Why,  he  hasn't  got  two  cents. 

Said  Will :  I  know,  but  wasn't  it  a  good  offer  ? 

The  other  joke  was  as  follows: 

Said  Cliff:  I  am  having  a  lot  of  trouble  with  my  wife.  Every 
morning  when  I  open  my  eyes  she  asks  me  for  money.  One 
morning  it  was  $1,  then  $2,  until  this  morning  she  asked  me  for 
$10. 

Said  Will:  What  does  she  do  with  the  money? 

Said  Cliff :  I  don't  know — I  never  give  her  any, 

They  gave  this  act  on  a  number  of  occasions  in  connection 
with  dances,  and  they  got  anywhere  from  $5  to  $10  a  night,  and 
divided  it.  Two  of  these  occasions  stand  out  in  the  mind  of  the 
grown-up  Will.  One  was  at  Bayonne,  New  Jersey,  and  after 
completing  the  performance — which  was  as  bad  as  usual,  or  pos- 
sibly worse — they  took  off  their  grease-paint,  and  Cliff  became 
engaged  in  dancing,  and  when  the  dance  was  over,  they  awoke 
to  the  discovery  that  the  man  in  charge  had  disappeared  with  the 
money;  It  was  midnight  and  they  had  not  a  cent  in  their  pockets. 
They  walked  from  Bayonne  to  Jersey  City,  quite  a  distance,  and 
at  6  o'clock  in  the  morning  there  was  a  stretch  of  water  between 
them  and  their  jobs.  How  to  get  across  was  the  question;  and 
you  will  note  the  ready  wits  which  servefd  to  make  Will  Fox  a 
many  times  over  millionaire.  He  managed  to  get  hold  of  a  piece 
of  cardboard  and  a  piece  of  string,  and  to  borrow  a  pencil.  He 
wrote  the  word  "Blind"  on  the  cardboard,  and  tied  it  around 
Cliff's  neck,  and  the  two  of  them  took  up  their  seats  at  the  ferry 
entrance.  The  fare  was  two  cents  at  that  time,  and  before  many 
ferry-boats  had  arrived  and  departed,  they  had  four  cents  and 
were  on  their  way  to  New  York. 

The  other  notable  engagement  took  place  at  Arlington  Hall 
on  the  East  Side,  and  was  an  entertainment  and  dance  for  the 
benefit  of  "Spike"  Hennessey,  a  well-known  prize-fighter  who 
had  developed  consumption.  When  the  two  actors  arrived  in 
front  of  the  hall,  they  noticed  a  big  three  page  picture  of  "Spike" 
in  his  prime,  and  Will  turned  to  Cliff  in  alarm  and  said :  "If  that 


22       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

bird  is  in  here,  we  are  going  to  get  a  licking."  (That  is  how  the 
grown-up  Will  tells  the  story,  but  I  am  not  sure  if  we  used  the 
word  "bird"  in  those  days;  we  said  "bloke.") 

Anyway,  Will  decided  that  if  he  was  going  to  take  a  licking 
from  "Spike"  Hennessey,  he  would  have  to  be  paid  first.  Cliff 
said  it  couldn't  be  done,  but  after  Will  insisted,  Cliff  finally  pro- 
duced $5  which  he  had  received  that  afternoon,  his  week's  wages 
as  messenger  boy  for  the  telegraph  company. 

They  did  their  act,  and  there  was  very  little  applause,  and  a 
few  hisses.  Will  left  the  building  with  all  his  grease-paint  and 
everything  on,  and  walked  home  just  as  fast  as  he  could. 
Apparently  the  report  that  "Spike's"  lungs  were  bad  was  incor- 
rect, for  he  had  plenty  of  energy  for  Cliff.  Said  "Spike,"  "You 
ruined  the  whole  show,"  and  punched  him  in  one  of  his  eyes  and 
blacked  it.  When  Cliff  arrived  home  with  one  eye  and  no  money, 
and  told  his  father  what  had  happened,  his  father  punched  the 
other  eye  and  blacked  that.  It  is  characteristic  of  Will  Fox  that, 
having  driven  a  shrewd  bargain  and  got  his  money,  his  heart  was 
touched  by  his  friend's  plight,  and  he  gave  him  back  his  $5. 

That  ended  the  career  of  Will  Fox  as  a  professional  actor. 
Cliff  Gordon  afterwards  became  what  is  called  a  "classic."  He 
was  the  foremost  German-speaking  comedian  in  this  country,  and 
began  producing  shows  and  made  quite  a  success.  The  acting  had 
been  his  idea,  and  he  had  tried  his  best  to  pass  on  his  talents  to 
Will,  but  in  vain. 


REEL  THREE 
PRETZELS  AND  BUFFALO  PANS 

AT  this  stage  in  the  life  of  little  Will  Fox,  he  shared  the  fate 
-£A*  of  many  an  East  Side  Jewish  boy  and  found  out  about 
Socialism.  I  will  let  him  tell  this  adventure  in  his  own  wards. 

, "Between  the  ages  of  thirteen  and  sixteen,  I  w^.g.jSpcialist. 
The  leader  of  the  Socialist  party  in "New  York  at  that  time  was  a 
man  by  the  name  of  DeLeon.  I  knew  him  very  well  and  was  his 
follower,  and  during  the  elections  of  those  three  years  I  stood  on 
the  soap-boxes  and  made  speeches.  In  my  mind  I  was  satisfied 
that  the  system  then  in  operation  was  wrong,  and  that  the  proper 
social  system  of  the  world  should  be  socialistic.  I  despised  both 
capital  and  capitalists.  Of  course,  this  was  during  the  period 
when  I  had  as  yet  not  been  able  to  save  a  single  dollar,  and  my 
earnings  were  just  sufficient  from  hand  to  mouth.  Then  came 
the  beginning  of  my  savings,  and  finally  in  my  penny  bank  I 
lound  myself  one  day  the  possessor  of  $10  in  change,  with  which 
I  opened  my  bank  account. 

t( Among  my  friends  and  acquaintances,  who  were  likewise 
struggling  and  just  earning  enough  from  hand  to  mouth,  I  had 
failed  to  mention  that  I  was  opening  a  bank  account.  I  knew 
that  if  I  had  $10,  the  proper  thing  for  me  to  do  was  not  to  hide 
it  in  the  bank  but  to  divide  it  with  my  friends.  Instead  I  kept 
adding  to  this  account,  until  I  had  $100  in  the  bank — and  to  me 
that  $100  looked  like  a  large  percentage  of  the  capital  of  the 
world.  After  that  I  couldn't  make  as  fine  an  address  on  a  soap- 
box. The  things  that  I  used  to  say  from  this  soap-box  were 
contrary  to  what  I  was  practicing,  and  the  larger  my  savings 
grew,  the  further  was  I  getting  away  from  rny  socialistic  prin- 
ciples. 

"Then  I  observed  this — that  my  friends  and  comrades  with 
whom  I  was  associating  socially,  and  who  were  earning  about 

23 


24        UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

the  same  wage  as  I,  and  whose  responsibilities  were  no  fewer 
than  mine,  were  freely  spending  that  which  they  were  earning, 
while  I  was  denying  myself  many  things.  Therefore,  I  had  a  sur- 
plus each  week  and  was  putting  it  in  the  bank.  Then  it  occurred 
to  me  that  we  were  not  equal;  that  they  could  also  have  saved 
some  money,  and  I  began  to  see  the  distinction  between  these 
different  people.  As  my  fund  grew  larger,  one  day  I  found  myself 
the  possessor  of  $500.  Of  course,  up  to  this  time  I  hadn't  cast 
a  Vote— I  was  a  talking  Socialist,  not  a  voting  one.  When  my 
time  came  to  cast  my  first  vote,  I  was  a  capitalist.  My  views  had 
been  changed  entirely.  I  then  found  my  political  views  as  fol- 
lows :  for  local  politics,  I  was  a  Democrat,  which  is  the  usual 
thing  in  the  City  of  New  York,  and  for  national  politics,  I  was 
a  Republican/' 

The  grown-up  Will  Fox  told  me  this  story  with  a  twinkle  in 
his  eye.  He  had  an  idea  somehow  that  he  was  teasing  me.  Yet 
at  the  same  time  I  know  that  he  respects  me  because  of  my  con- 
victions which  I  have  held  to.  And,  oddly  enough,  he  is  anxious 
that  I  should  not  consider  him  a  hide-bound  conservative.  Later 
on  I  shall  tell  you  about  his  ideas  on  social  reconstruction.  ^  Sev- 
eral times  while  he  was  telling  them  to  me,  he  remarked :  "You 
see,  Mr.  Sinclair,  I  have  not  forgotten  entirely  what  I  learned 
from  Daniel  DeLeon."  The  truth  is  that,  like  most  Americans, 
he  has  water-tight  compartments  in  his  brain.  He  can  admire 
and  ardently  defend  Herbert  Hoover,  and  at  the  same  time  hold 
quite  sincerely  some  enlightened  ideas  on  social  planning. 

At  the  age  of  fifteen,  Will  began  working  for  a  concern 
called  G.  Lippman  &  Sons,  and  here  is  his  story  about  it  : 

"Old  man  Lippman  had  the  reputation  for  forty  years  or 
longer  of  having  always  been  on  time  to  open  the  factory  and 
always  the  last  man  out  at  night.  He  opened  the  door  in  the 
morning  and  locked  it  at  night.  He  had  a  large  clock  in  the  center 
of  this  loft  which  was  about  100  by  200  feet.  He  had  a  shrieky 
voice.  He  would  wait  until  it  was  7  o'clock  and  then  he  would 
yell  the  word  Time !'  That  was  the  signal  to  begin  work.  One 
morning  we  were  ready  to  go  upstairs,  but  Lippman  had  not 
arrived  yet.  Everybody  was  perfectly  happy  about  it  and  having 
a  regular  picnic.  We  all  went  upstairs,  adjusted  ourselves,  and 
Lippman  appeared  and  moved  the  hands  of  the  clock  "back  to 


PRETZELS  AND  BUFFALO  PANS  25 

seven,  and  when  he  got  it  there  he  yelled  his  usual  Time !' — so 
we  were  35  minutes  late  all  around  that  day/5 

In  the  Rivington  Street  tenement  it  was  the  rule  that  each 
occupant  had  to  clean  and  scrub  the  stairs  and  hallway  of  the 
floor  he  lived  on.  The  property  belonged  to  a  man  by  the  name 
of  Michael,  who  had  a  butter  and  egg  store  downstairs,  and  here 
is  a  story  of  the  struggle  for  existence  in  the  ghetto  of  New 
York: 

"Michael  had  a  very  fine  cat,  the  largest  cat  I  ever  saw.  I 
knew  Michael's  cat  lived  on  cheese — cheese  and  milk  was  all 
this  cat  would  eat.  When  the  week-end  came,  I  would  like  to  go 
on  picnics,  so  I  would  go  down  to  borrow  the  cat  and  say  we 
had  mice,  which  we  did  not.  Later  I  would  go  downstairs  and 
say  that  I  had  offered  the  cat  some  chicken,  and  that  he  wouldn't 
eat  it,  and  I  wanted  some  cheese  for  the  cat.  Michael  would 
thereupon  cut  some  nice  Swiss  cheese  for  the  cat,  and  I  would 
leave  with  the  cheese,  but  the  cat  never  saw  it,  because  I  would 
take  the  cheese  on  my  picnic.  Then  on  Monday  morning,  I  would 
bring  Michael's  cat  back.  Necessity  is  the  mother  of  invention. 
I  liked  Swiss  cheese  in  those  days  and  that  was  the  only  way  I 
had  of  getting  it." 

In  connection  with  these  struggles  and  temptations,  the 
grown-up  Will  reports: 

:tl  can  recall  going  out  with  boys  when  I  was  sixteen,  seven- 
teen, or  eighteen,  and  though  I  wanted  to  do  the  things  they  did, 
on  checking  up  the  cost  I  usually  did  without.  I  knew  when  the 
soles  of  my  shoes  had  holes  in  them  that  that  was  the  time  to 
have  them  repaired,  but  I  delayed  it  by  putting  pasteboard  in 
them  to  save  the  half-soling.  It  would  have  been  so  easy  to 
have  spent  all  that  I  saved  in  those  years.  Every  penny  was 
something  that  I  denied  myself,  with  the  thought  in  mind  that  if 
I  was  going  forward,  I  had  to  have  money.  I  saw  that  capital 
was  what  I  needed.  Either  I  had  to  be  content  to  work  for  some>- 
one  else  all  my  life,  or  fight  for  independence.  The  latter  course 
made  it  necessary  to  deny  myself  everything  I  could  possibly 
contrive  to  do  without  until  I  had  accomplished  my  aim  and 
could  afford  to  permit  myself  the  things  I  missed. 

"My  father  described  his  lack  of  progress  by  saying  he  had 
never  had  an  opportunity  to  save.  He  was  married  when  he  came 


26       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

here  and  could  never  earn  any  more  than  it  took  to*  keep  his 
family.  It  must  have  been  so  because  he  didn't  drink  or  gamble, 
and  he  always  worked  hard  when  he  could,  but  could  never  save 
a  dollar.  My  mother  encouraged  me  to  save,  and  I  can  recall 
many  occasions  when  she  thanked  me  for  offering  her  an  extra 
dollar  or  two  that  I'd  earned,  but  said  that  she  would  much  rather 
I  put  it  in  the  bank.  I  still  have  the  original  account  in  the  Dry- 
dock  Savings  Bank.  That  book  is  one  of  my  proud  possessions 
to  this  day." 

Will  Fox  continued  to  work  for  different  firms  in  the  cutting 
trade  and  his  wages  increased  until  he  was  earning  $17  a  week ; 
and  his  pennies,  nickels  and  dimes  mounted  until  at  the  age  of 
twenty  he  had  $580  in  the  bank.  Then  he  saw  his  first  oppor- 
tunity. Admiral  Dewey  had  captured  Manila,  and  came  back  to 
New  York  to  receive  the  welcome  of  a  conquering  hero.  There 
was  to  be  a  parade  starting  at  Grant's  tomb,  and  going  down  to 
Washington  Square.  Will  figured  out  what  that  enormous  crowd 
would  wish  to  purchase.  He  drew  $500  from  the  bank,  and  with 
one-fourth  of  this  money  he  bought  bottled  soda  water — "pop," 
as  it  was  called.  With  a  second  fourth  he  purchased  soap-boxes ; 
for  another  fourth,  cheese  and  ham  sandwiches ;  and  for  the  last 
fourth,  pretzels.  This  is  what  happened: 

Wagons  were  engaged  to  move  the  supplies  uptown  to  the 
neighborhood  of  100th  Street  and  Riverside  Drive.  During  the 
night  it  turned  cold  after  a  hot  spell,  and  in  the  morning  there 
sprang  up  a  terrific  windstorm.  It  was  impossible  to  sell  the  soda 
pop,  because  what  people  wanted  was  hot  coffee.  You  couldn't 
sell  the  soap-boxes  because  if  you  tried  to  stand  on  one,  the  wind 
would  blow  you  off.  And  as  for  the  cheese  and  ham  sandwiches, 
the  amateur  caterer  bad  neglected  to  have  them  wrapped  up,  and 
the  wind  was  blowing  so  hard  across  the  dirt  road  that  the  sand- 
wiches were  rendered  uneatable. 

So  all  that  was  left  was  the  pretzels — or  "bretzels,"  as  we 
called  them  in  those  days.  You  may  think  this  a  funny  story,  but 
don't  forget  that  to  the  twenty-year  old  business  man  it  was  a 
serious  matter,  and  might  have  meant  his  commercial  life  or 
death.  He  was  about  to  lose  the  savings  of  ten  years. 

"I  could  picture  my  ruination.  The  maximum  amount  that  I 
could  get  out  of  the  pretzels  would  be  the  $125  plus  about  50  per 


PRETZELS  AND  BUFFALO  PANS  27 

cent  profit.  Of  course  I  had  a  dozen  or  more  salesmen  with  me. 
I  decided  there  was  only  one  way  out,  and  that  was  to  bring  back 
the  $500  in  pretzels.  We  soon  learned  that  we  had  many  compet- 
itors, who  were  not  only  selling  at  cost,  but  below  cost.  I  con- 
ceived the  idea  of  walking  ahead  of  these  dozen  salesmen  of  mine, 
and  delivering  a  talk  on  the  qualities  of  my  pretzels,  and  that 
there  was  a  souvenir  of  Admiral  Dewey  on  the  inside  of  eacB. 
one.  Of  course  when  the  purchaser  got  the  pretzels,  he  broke 
them  apart  or  bit  into  them  and  looked  for  Admiral  Dewey 
inside,  but  by  that  time  the  procession  of  salesmen  had  marched 
on.  We  sold  those  pretzels,  and  when  we  calculated  the  money, 
we  had  back  our  $500  with  a  slight  profit." 

For  seven  years  now  Will  Fox  had  had  his  eye  upon  Eve  Leou 
As  he  described  it  to  me,  he  w6oed  Eve's  father  first.  The  son 
of  an  ordinary  workingman,  he  had  to  make  good  on  his  own; 
he  had  to  convince  him  that  he  was  a  serious  boy,  with  brains  in 
his  head  and  destined  to  rise  in  the  world.  He  had  a  responsible 
position  now,  and  was  earning  $17  a  week,  which  was  enough 
to  keep  a  family  modestly  in  those  days.  Having  obtained  her 
father's  permission,  he  invited  Eve,  now  a  young  lady  of  sixteen, 
to  go  to  a  show  with  him, 

I  must  explain  that  Eve's  mother  had  died  when  she  was  nine 
years  old,  leaving  six  children.  As  Eve  was  next  to  the  oldest — 
the  oldest  being  a  boy — the  burden  of  being  a  mother  to  her  little 
sisters  and  brothers  fell  upon  her  shoulders.  And  now  she  was  a 
very  sedate  and  responsible  person ;  also,  I  am  told  by  the  grown- 
up Will,  the  most  beautiful  girl  he  had  ever  seen.  The  second 
time  they  went  to  a  show,  they  attended  a  performance  of  "The 
Liars,"  with  John  Drew  as  the  star.  Coming  home  on  the  street- 
car on  a  bitterly  cold  winter  night,  the  street-car  for  some  reason 
became  stalled,  and  there  they  had  to  sit  for  two  hours  in  the 
cold  utiheated  car.  Will  Fox  seemed  to  think  that  this  was 
a  suitable  occasion  on  which  to  explain  the  state  of  his  heart 
to  Eve, 

He  told  her  that  his  hands  were  very  cold.  She  had  a  fur 
muff,  and  it  was  his  hope  that  she  might  offer  to  warm  one  of 
those  cold  hands.  Maybe  she  missed  the  point,  or  maybe  it  was 
the  too  great  kindness  of  her  heart — anyway,  she  gave  him  the 
whole  muff,  and  told  him  to  put  his  two  hands  into  it. 


28       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

But  even  so,  he  managed  to  become  engaged  to  her,  and  there 
was  a  fine  public  wedding  which  Eve's  father  provided.  This 
wedding  took  place  on  the  31st  of  December,  and  the  next  day 
happened  to  be  Will's  twenty-first  birthday.  It  happens  also  to 
be  New  Year's  Day,  which  proved  a  very  convenient  arrange- 
ment, for  throughout  the  rest  of  their  life,  the  Fox  family  has 
been  able  to  combine  three  celebrations  in  one.  I  don't  know 
whether  this  economy  was  deliberate,  but  Mr.  Fox^  tells  me  in 
this  story  how  carefully  he  watched  all  his  opportunities. 

"Of  course,  my  co-workers  must  be  invited,  and  they  felt 
their  presence  to  be  incomplete  unless  they  contributed  to  a 
wedding  gift.  About  forty  or  fifty  had  contributed  enough  apiece 
to  make  a  fund  of  $100.  They  asked  me  what  I  wanted  and  I 
suggested  some  furniture.  They  gave  me  the  money  and  told 
me  to  pick  it  out  myself.  I  put  the  $100  in  the  bank,  and  bought 
the  furniture  on  the  installment  plan." 

So  now  our  hero  is  no  longer  "Little  Will/'  but  has  become 
a  dignified  married  man,  and  we  shall  have  to  try  to  find  a  new 
way  to  address  him.  His  wife  and  intimate  friends  call  him 
"Bill,"  but  neither  you  nor  I  know  him  that  well  On  the  other 
hand,  "Mister"  is  a  somewhat  formal  and  stilted  mode  of  address. 
I  notice  that  his  lawyer  and  other  associates  address  him  as 
(CW.  F.,"  and  that  seems  to  denote  about  the  right  degree  of 
Intimacy;  so  that  shall  be  his  name  throughout  the  rest  of  our 
narrative. 

He  had  decided  now  to  go,  into  business  for  himself,  and  the 
IMe^e  ;fead  s"eteeted  was  the  cloth  examining  and  shrinking  busi- 
ness. It  appears  that  when  cloth  comes  from  the  mills,  the  manu- 
facturer must  do  two  things  before  it  can  be  used  for  garments. 
He  must  make  sure  that  it  is  free  of  imperfections  and  of  correct 
measurement,  and  it  must  be  shrunk.  This  special  work  required 
little  capital  and  little  space  to  work  in,  and  so  W.  F.,  with  one 
of  his  fellow  employees,  established  what  they  called  "The 

Company/'  The 


partner  was  to  do  the  examining  and  employ  people  to  do  the 
shrinking,  while  W.  F.  went  out  to  solicit  trade.  The  salary  of 
the  partner  had  been  $25  a  week,  and  that  of  W.  F.  had  been 
$17,  and  for  the  first  year  they  were  hardly  able  to  make  this 
much. 


PRETZELS  AND  BUFFALO  PANS  29 

That  wasn't  enough  for  the  restless  William  Fox.  He  was 
casting  about  for  ways  to  make  money  more  quickly,  and  in  his 
efforts  he  very  nearly  brought  himself  to  ruin  again.  He  had  not 
learned  his  lesson  from  the  Admiral  Dewey  celebration ;  there  was 
another  great  public  event  on  the  way — the  Buffalo  Pan-Ameri- 
can Exposition.  This,  you  may  recall,  was  the  occasion  on  which 
President  McKinley  was  shot,  and  chance  brought  it  about  that 
W.  F.  was  walking  down  Main  Street  in  Buffalo  and  was  within 
100  feet  of  the  spot  where  Czolgosz  dsew  his  revolver  and  fired. 
He  saw  McKinley  fall,  and  remained  in  Buffalo  until  Roosevelt 
came  down  from  the  Adirondacks  and  was  made  President  of 
the  United  States.  The  trip  to  Buffalo  was  caused  in  the  fol- 
lowing way: 

"A  chap  came  to  me  one  day  and  said  that  he  had  invented 
something  that  could  make  millions  of  dollars  for  himself  and 
the  person  who  backed  him  financially.  He  exhibited  a  patent 
paper  that  he  had  just  received  from  Washington.  It  was  a 
patent  on  a  small  miniature  pan  about  one  or  two  inches  in  diam- 
eter, and  the  length  of  the  pan,  including  the  handle,  was  about 
four  or  five  inches.  In  the  middle  of  the  pan  was  an  American  flag 
with  a  buffalo  printed  on  it;  therefore,  it  was  'Buffalo1  'Pan' 
'American' — all  he  needed  was  'Exposition/  and  the  date  of  it. 
He  estimated  that  there  would  be  about  10,000,000  people  in 
Buffalo  to  see  the  exposition,  and  it  was  fair  to  assume  that 
every  one  of  these  people  would  buy  at  least  ten  of  these  pans 
for  souvenirs.  The  price  was  $1,  so  the  estimated  gross  return 
was  $100,000,000. 

"Whatever  money  I  had  at  that  time  I  invested  in  this  enter- 
prise. This  was  about  a  year  and  half  or  two  years  after  I  was 
married.  I  thought  this  was  my  big  chance  and  proceeded  to 
manufacture  these  pans.  I  think  the  total  investment  was  about 
$600.  Then  I  was  assigned  to  go  to  Buffalo  and  market  these 
pans,  and  of  course  the  factory  could  manufacture  them  as 
quickly  as  we  wanted  them.  I  remember  shipping  the  pans  in 
cases  to  Buffalo. 

"On  my  arrival  there,  I  had  but  $3,  as  I  was  confident  that  my 
pans  would  sell  promptly.  From  the  railroad  station  to  the  fair 
grounds  was  about  five  miles,  and  on  either  side  of  the  avenue 
the  city  had  issued  licenses  to  permit  the  erection  of  wooden 


30       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

stands  on  which  wares  could  be  displayed  to  the  visitors  to  this 
exposition.  And  lo  and  behold,  all  that  was  displayed  on  these 
stands  were  pans  with  buffalos  and  American  flags  stamped  on 
them  I  There  were  enough  pans  there  to  supply  everybody  with 
100  pans.  I  had  wired  for  reservations  at  the  Iroquois  Hotel,  one 
of  the  nicest  in  town,  byt  when  I  beheld  those  buffalo  pans,  I 
•decided  to  change  my  residence  to  a  boarding  house  on  a  side 
street,  where  I  paid  $1  a  day,  so  I  would  have  enough  to  last 
at  least  three  days." 

So  here  again  was  William  Fox  fighting  for  his  savings.  He 
walked  the  streets  of  Buffalo,  and  his  attention  was  caught  by  a 
five-and-ten-cent  store,  then  something  new,  owned  by  a  man 
named  Woolworth.  This  store  sold  novelties,  but  it  did  not  have 
any  buffalo  pans,  so  the  idea  occurred  to  the  pan  salesman  to 
get  hold  of  Mr.  Woolworth  and  persuade  him  to  enter  the  pan 
business.  He  wired  that  he  had  a  very  important  piece  of  busi- 
ness to  talk  over  with  him,  and  gave  the  address  at  the  Iroquois 
Hotel,  and  waited  there  until  the  answer  came  making  an  appoint- 
ment. Then  he  told  frankly  his  hard-luck  story;  out  of  his  last 
dollar,  he  had  spent  25  cents  for  breakfast  and  25  cents  for  a 
telegram  to  Mr.  Woolworth,  He  had  a  wife  and  baby  in  New 
York  and  a  business  that  was  not  very  prosperous. 

The  great  Mr.  Woolworth  was  "a  bit  rough"  at  first.  He 
didn't  like  the  idea  of  having  given  an  interview,  supposedly  for 
his  own  profit,  and  discovering  that  it  was  an  amateur  pan  sales- 
man  in  trouble.  W.  F.  humbly  proposed  to  leave  the  pans  with 
him  on  a  gamble,  and  be  content  with  his  railroad  fare  back  to 
New  York ;  but  Woolworth  finally  paid  him  the  cost  of  the  pans 
—about  $600 — and  so  once  more  William  Fox  was  saved  for  a 
great  careen  After  the  exposition  was  over,  he  inquired  of 
Woolworth  whether  the  transaction  had  proved  profitable,  and 
was  relieved  to  learn  that  it  had. 

So  our  hero  went  back  to  the  cloth  examining  and  shrinking 
business,  and  during  the  second  year  the  business  grew  and  they 
made  a  profit  of  $10,000.  Their  partnership  arrangement  con- 
sisted of  a  piece  of  brown  paper  on  which  they  had  written  their 
contract.  Says  W.  F. : 

"About  the  only  provision  was  that  checks  had  to  be  counter- 
signed. Our  partnership  ended  when  on  one  Saturday  the  checks 


PRETZELS  AND  BUFFALO  PANS  31 

were  tendered  to  me  for  countersigning,  and  I  refused  because 
there  was  no  money  in  the  bank.  My  partner  insisted  that  on 
Monday  I  could  go  out  and  collect  enough  money  to  cover  the 
checks  and  deposit  it  in  the  hank  before  the  checks  went  through, 
but  I  said  that  was  no  way  of  doing  business." 

W.  F.  decided  that  he  would  buy  out  his  partner  and  run  the 
business  according  to  his  own  ideas.  It  became  necessary  for 
him  to  raise  the  funds,  and  he  went  to  the  bank  to  borrow  $1,000 
that  was  needed,  and  here  is  his  first  experience  with  a  banker : 

"I  bought  myself  a  whole  new  outfit  of  clothing  in  order  to 
make  a  good  impression  so  the  bank  would  lend  me  the  money — 
I  had  no  collateral.  The  bank  was  the  German  Exchange  Bank 
and  the  president  was  Mr.  Adrian.  I  can  remember  his  words 
now ;  he  said :  'You  are  broke.  Now  what  made  you  go  out  and 
buy  those  clothes?  What  was  your  purpose?  You  have  done 
nothing  but  spend  money.  When  the  bank  lends  money  it  wants 
to  feel  that  it  is  lending  it  to  someone  who  will  save  money  and 
be  able  to  pay  it  back;  some  day/  However,  I  got  the  money,  paid 
my  partner  off,  and  as  times  got  better,  business  grew,  and 
shortly  thereafter  I  found  myself  with  a  capital  of  close  to 
$50,000  made  in  that  business." 


REEL  FOUR 
NICKELODEONS  AND  COMMON   SHOWS 

IN  1894  Thomas  Edison  had  invented  a  device  which  he  called 
a  "kinetoscope."  Out  at  his  place  in  East  Orange  he  had 
spent  the  enormous  sum  of  $25,000  upon  experiments,  and  had 
built  a  shanty  covered  with  tar  paper  and  known  to  his  friends 
as  "the  Black  Maria."  Inside  this  Black  Maria  was  a  huge 
device  weighing  more  than  a  ton,  a  camera  with  a  rapidly  moving 
shutter  by  which  you  could  take  a  series  of  pictures  of  something 
in  motion— provided  that  its  motion  didn't  carry  it  away  from 
the  front  of  the  camera.  To  this  place  came  pugilists  and  acro- 
bats and  dancers,  and  they  performed  in  front  of  the  camera,  and 
so  there  began  to  spring  up  in  the  cities  places  called  nickelodeons, 
a  sort  of  arcade  with  a  row  of  machines  having  eye-pieces.  You 
dropped  a  nickel  into  the  slot  and  gazed  into  the  eye-pieces,  and 
you  saw  as  real  as  life  the  pugilists  boxing  and  the  acrobats 
turning  somersaults  and  the  dancers  kicking  up  their  skirts. 

Then  several  years  later  appeared  another  device  generally 
called  the  "vitagraph"  or  the  "bio&cq^e,"  which  threw  these  same 
images  upon  a  screen.  The  camera  weighed  somewhat  less  than 
a  ton  now,  and  it  could  be  taken  on  a  truck  and  placed,  say  by  a 
railroad  track,  and  so  you  could  see  the  Twentieth  Century 
Limited  emerging  from  a  tunnel  and  rushing  down  upon  you.  I 
well  remember  seeing  the  first  pictures  in  a  place  called  the  Eden 
Musee  on  Twenty-third .  Street  in  New  York.  There  were  wax- 
works and  all  sorts  of  horrors — President  Garfield  being  shot, 
and  the  Chicago  anarchists  making  bombs,  and  a  policeman  who 
looked  so  lifelike  that  you  went  up  and  asked  him  the  way  to 
the  labyrinth  of  mirrors  or  whatever  delightful  thrill  you  were 
seeking.  Then  you  went  into  a  little  court  with  palm  and  rubber 
trees,  and  sat  in  rows  of  chairs,  and  there  was  the  image  of  the 
Twentieth  Century  Limited.  It  trembled  and  jumped  so  that  it 

32 


NICKELODEONS  AND  COMMON  SHOWS          33 

almost  put  your  eyes  out,  but  nevertheless  it  was  so  real  that 
you  could  hardly  keep  from  ducking  out  of  the  way  as  it  bore 
down  upon  you.  A  tremendous  adventure! 

It  happened  that  on  Fourteenth  Street  there  was  a  place 
called  the  "Automat,"  with  phonographs,  punching  bags,  weigh- 
ing machines,  chewing-gum  machines  and,  of  course,  kinetoscopes. 
The  Automat  was  one  of  the  sights  of  the  town,  because  no 
employees  were  needed,  only  a  watchman.  You  dropped  your 
nickels  into  the  machines,  and  down  in  the  basement  there  was  a 
track  running  under  the  machines  and  a  little  car  running  on  the 
track,  and  as  it  passed,  the  machines  spilled  their  nickels  into  it, 
and  then  the  car  ran  around  to  th  o-1^r  side  of  the  room  and 
dumped  the  nickels  into  a  funnel,  from  tiio  other  end  of  which 
they  emerged,  all  counted  and  wrapped  and  ready  for  deposit  in 
the  bank.  It  was  almost  as  marvei  -  \s  J-:  ,  Chicago  stock-yards, 
where  a  hog  was  dropped  into  the  machine  at  one  end,  and 
sausages  and  buttons  and  hair-combs  came  out  at  the  other  end. 

The  Automat  pleased  W.  F.,  and  he  made  it  known  that  he 
was  in  the  market  to  buy  an  establishment  of  that  sort.  Soon 
there  came  an  agent  suggesting  that  there  was  one  at  700  Broad- 
way, Brooklyn,  owned  by  a  man  named  J.  Stewart  Blackton, 
then  president  of  the  Vitagraph  Company  of  America,  and 
destined  to  become  one  of  the  big  moving  picture  millionaires. 
W.  F.  made  an  appointment  to  inspect  the  property,  and  tie  tells 
this  story: 

"When  I  went  there,  by  appointment,  there  was  a  large  crowd. 
When  I  went  again  a  little  later  in  the  week,  also  by  appointment, 
there  was  an  even  l^xger  crowd.  I  thought  it  was  a  good  thing, 
and  after  certain  negotiations,  I  bought  the  establishment,  I  took 
charge  of  it  on  the  following  Monday,  and  only  about  two  persons 
dropped  in  all  day.  I  realized  that  someone  had  supplied  the 
crowd  on  the  two  former  occasions  when  I  had  gone  to  see  the 
place.  This  was  somewhere  around  in  May,  and  I  was  told  that 
business  was  always  bad  in  summer." 

I  asked  W.  F.  to  describe  the  agent  who  had  sold  him  that 
"salted"  gold-mine.  The  answer  was :  "He  was  the  handsomest 
man  you  ever  saw ;  well  built,  well  dressed  and  always  immacu- 
late." Sometime  afterwards,  it  appears,  he  came  to  W.  F.  and 
said  he  was  broke,  and  borrowed  $50  to  go  out  West.  Twenty 


34       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

years  later,  in  a  brokers'  board-room,  he  recognized  his  old-time 
victim,  and  came  up  and  introduced  himself,  and  repaid  the  $50. 
The  story  he  told  was  that  he  had  discovered  land  containing 
sulphur,  and  had  come  back  and  sold  it  to  New  York  capitalists, 
and  was  now  worth  $7,000,000.  He  offered  his  old-time  victim  a 
tip,  to  buy  the  stock  of  the  Texas  Gulf  and  Sulphur  Company  ; 
in  a  year  or  two  the  buyer  would  make  millions.  W.  F.,  having 
bought  a  "salted"  gold-mine  from  this  man,  declined  to  buy  a 
"salted"  sulphur-mine.  The  joke  of  the  story  is  that  the  tip  was 
a  real  one,  for  the  stock  went  from  $40  a  share  to  $240. 

But  let  us  return,  to  No.  700  Broadway,  Brooklyn,  in  the  year 
1903.  It  was  another  crisis  like  that  of  the  sandwiches  and 
pretzels,  or  that  of  the  Buffalo  pans.  How  was  the  crowd  to  be 
induced  to  enter  the  Fox  Automat?  Quite  recently  he  had 
attended  a  showing  of  the  new  "moving  pictures" ;  he  had  seen  a 
picture  of  a  tree,  and  the  leaves  of  the  tree  had  moved,  and  the 
man  behind  him  had  said  that  it  was  a  trick,  someone  was  shaking 
the  curtain.  But  W.  F.,  with  his  inquiring  mind,  had  talked  to 
the  operator  after  the  performance  was  over,  and  asked  to  have 
the  trick  explained.  No,  the  screen  had  not, been  shaken;  the 
pictures  actually  did  move  of  themselves.  The  operator  showed 
the  film,  which  was  nearly  three  times  as  wide  as  it  is  now,  and 
did  not  run  on  sprockets,  but  merely  through  a  groove.  The 
length  of  the  film  was  then  100  feet. 

W.  F.  investigated  further.  He  saw  the  pictures  of  the 
Twentieth  Century  Limited,  and  a  still  more  marvelous  produc- 
tion, a  little  story  told  in  front  of  the  camera,  called  "The  Life 
of  an  American  Fireman" ;  then  another  one,  still  more  thrilling, 
"The  Great  Train  Robbery."  He  saw  the  public  pouring  in  to 
witness  these  spectacles,  and  he  examined  the  premises  he  had 
rented  and  noted  that  there  were  rooms  upstairs  used  as  a  dwell- 
ing. It  occurred  to  him  that  he  might  rent  these  premises  also, 
and  put  out  the  tenants  and  turn  it  into  a  showroom  for  the  new 
picture  stories.  If  he  took  the  people  up  by  the  front  stairway, 
and  after  the  show  sent  them  down  by  the  rear  stairway, 
they  would  enter  the  nickelodeon  at  the  rear  and  have  to  walk 
past  all  the  machines,  and  very  probably  they  would  drop  some 
nickels  on  the  way. 

With  W.  F.  a  thing  is  done  almost  as  soon  as  he  thinks  of  it. 


NICKELODEONS  AND  COMMON  SHOWS          35 

There  was  a  show  room  with  a  screen,  and  146  chairs,  and  some 
display  posters  outside  informing  the  public  that  moving  pictures 
were  to  be  seen.  But  alas,  the  Brooklyn  public  didn't  know  what 
moving  pictures  were,  and  nobody  went  upstairs.  W.  F.  stood 
outside  for  a  whole  day,  gazing  anxiously  at  the  public,,  and 
regretting  that  he  had  no  personal  charms  to  lure  them  into  his 
establishment. 

But  then  came  a  man  who  had  the  necessary  charms.  W.  F. 
describes  him  as  a  fellow  with  a  great  big  Western  hat.  He  said: 
"What  are  you  worrying  about?"  and  W.  F.  told  his  troubles. 
He  had  the  greater  part  of  his  fortune  in  the  place,  and  it  wasn't 
so  much  the  fortune  as  that  he  hated  to  fail.  The  fellow  offered 
to  take  charge  of  it  and  run  it,  and  told  him  to  shut  up  the  place 
that  day  and  come  back  the  next. 

The  next  day  he  came,  and  had  with  him  a  coin-manipulator, 
a  sword-swallower  and  a  fire-eater — which  did  W,  F.  prefer? 
W.  F.  carried  no  fire  insurance,  so  fire-eaters  were  ruled  out; 
also  swallowing  swords  might  possibly  be  dangerous — there  might 
be  employers'  liability  laws.  But  there  could  be  no  harm  in  a 
coin-manipulator.  He  was  a  little  fellow,  dressed  in  black  satin 
breeches  and  a  black  satin  coat,  wearing  a  black  mustache  and  a 
little  black  goatee,  neither  of  which  belonged  to  him.  All  this  was 
in  imitation  of  "Hermann  the  Great."  He  set  tip  his  table  and 
started  to  work  in  the  doorway  of  the  establishment;  and  when 
the  crowd  gathered,  he  told  them  that  he  would  finish  the  per- 
formance upstairs,  and  show  them  yet  more  wonderful  tricks, 
and  that  admission  was  free  for  the  present.  The  crowd  came 
trooping  up,  and  there  they  found  out  what  moving  pictures  were, 
and  in  a  week  there  was  such  a  crowd  that  the  police  had  to  be 
called  in  to  control  them. 

So  at  last  W.  F.  had  found  a  real  gold  mine !  Here  was  the 
way  of  fortune  plain  before  him,  and  his  one  task  was  to  get 
there  ahead  of  the  others.  He  got  two  friends  to  join  him,  and 
began  renting  stores  on  the  crowded  avenues  of  Brooklyn,  and  in 
each  one  of  them  they  set  up  a  screen  and  a  projection  machine 
and  rows  of  chairs — of  which  the  total  must  not  exceed  299.  Up 
to  that  limit  you  could  have  a  "common  show"  license ;  but  if 
you  had  300  chairs  or  more,  you  were  a  theatre,  and  the  fire  laws 
took  strict  charge  of  you. 


36       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

So  presently  here  was  William  Fox  with  fifteen  show  places 
in  Brooklyn  and  New  York.  I  made  him  search  his  memory  for 
all  the  details  about  those  old-time  pictures.  There  was  one  called 
"The  Automobile  Thieves."  Automobiles  were  then  just  coming 
into  fashion,  and  some  producer  had  conceived  the  idea  of  a  new 
way  of  stealing.  Soon  after  this  someone  did  actually  steal  an 
automobile,  and  was  arrested,  and  there  was  a  great  clamor  in 
the  newspapers— this  new  device  of  moving  pictures  was  cor- 
rupting public  morals  and  stimulating  crime!  The  New  York 
"World,"  which  built  up  its  circulation  by  carrying  on  crusades, 
started  a  crusade  against  moving  pictures. 

Also  there  was  one  called  "The  Runaway  Wagon."  This  was 
a  trick  picture.  It  wasn't  an  automobile,  merely  a  wagon,  yet  it 
went  running  up  and  down  hill  all  by  itself.  The  trick  was  that 
the  photographer  had  blotted  out  the  horse,  A  still  trickier  one 
was  a  man  putting  on  a  pair  of  shoes  and  the  shoes  lacing  them- 
selves. 

The  names  of  the  companies  that  made  the  pictures  were 
Vitagraph,  Biograph,  Lubin,  Pathe,  and  Essanay. 

The  clamor  against  these  pictures  continued  in  the^  news- 
papers. In  court  the  lawyer  would  say :  "Your  Honor,  this  child 
never  stole  before.  He  saw  stealing  in  a  moving  picture^  and 
that  suggested  it  to  him."  This  clamor  disturbed  the  associates 
of  W.  F.,  whose  wives  thought  they  were  in  a  disreputable 
business.  So  W,  F.  bought  them  out,  and  added  more  places 
until  he  had  twenty-five.  He  had  his  own  ideas  about  the  moral 
effect  of  pictures,  for  he  noticed  that  wherever  the  shows  were 
going  well,  the  business  of  saloons  began  to  dwindle. 

"My  conclusion  was  that  the  workingman's  wage  was  not 
large  enough  to  buy  tickets  to  the  theatre  for  himself  and  family, 
so  he  found  his  recreation  in  drinking  his  glass  of  beer  against 
the  bar.  But  when  the  motion  picture  theatre  came,  he  could 
buy  a  ticket  for  10  cents,  and  for  his  wife  the  same,  and  if  he 
had  a  child  he  could  buy  a  ticket  for  5  cents.  They  could  be 
entertained  anywhere  from  two  and  a  half  to  three  hours,  and 
the  man  found  he  was  getting  a  much  bigger  kick  holding  his 
kid's  hand,  or  the  hand  of  his  wife,  than  he  would  be  getting 
from  his  drink  at  the  bar.  I  have  always  contended  that  if  we 
had  never  had  prohibition,  the  motion  pictures  would  have  wiped 


NICKELODEONS  AND  COMMON  SHOWS          37 

out  the  saloon.  We  then  opened  a  theatre  at  110th  and  Broad- 
way. On  the  corner  of  this  property  was  a  saloon  and  we  tried 
to  buy  the  lease  of  the  owner  but  he  wouldn't  sell  Within  a 
year  after  that  theatre  opened,  he  could  not  get  enough  business 
to  pay  his  rent." 

W.  F.  went  on  to  tell  me  of  a  later  experience  when  he  leased 
the  Star  Theatre,  on  Lexington  Avenue  near  107th  Street,  which 
had  been  used  for  melodrama.  They  were  then  called  "ten- 
twenty-thirts."  •  On  the  four  corners  of  107th  Street  there  were 
four  saloons,  frequently  called  "gin-mills/*  but  after  this  theatre 
was  converted  into  a  moving  picture  theatre,  one  after  another 
the  gin-mills  closed  up,  and  within  two  or  three  months  were 
occupied  by  other  tenants. 

Not  since  the  days  of  the  forty-niners  had  there  been  such 
a  way  for  the  little  fellow  to  get  rich  as  in  this  new  business. 
Everything  depended  upon  a  location  where  the  crowds  were 
passing.  W.  F.  found  that  in  order  to  get  the  right  location, 
it  would  often  pay  him  to  lease  the  whole  building — even  though 
the  fire  laws  required  that  the  upstairs  tenants  be  turned  out 
before  moving  pictures  were  shown  in  the  building. 

He  conceived  the  idea  of  combining  motion  pictures  and 
vaudeville,  with  the  admission  price  of  10  cents  to  any  seat  in 
the  house.  He  tried  in  each  case  to  find  a  manager  who  had  a 
good  voice,  and  this  manager  would  sing  what  were  called  illus- 
trated songs.  It  was  easy  to  get  new  songs,  because  the  song 
writers  wanted  them  popularized  before  the  sheet  music  was 
offered  to  the  public.  The  manager  would  sing  the  song  and  there 
would  be  lantern  slides  with  pictures  illustrating  the  songs.  The 
audience  would  be  invited  to  join  the  singing — the  more  the 
merrier.  There  was  always  a  line  of  people  waiting  to  get  into 
these  shows.  The  problem  was  to  rent  new  places  ahead  of  the 
other  fellow.  Rejoe,Js-Ae""*§f6ry  of  th£  iir$t  Fox  theatre: 

"It  was  located  at  194  Grand,  .Street,  Brooklyn,  and  had  been 
devoted  to  burlesque,,  WtoxJ  ;vK££t  to  visit  the  premises^  it  was 
winter  and  the  agent  toii  -m»  to-bong  along  rubber  boots*  I  did, 
and  we  walked  in  snow  and  water  up  to  the  knees ;  the  roof  was 
practically  gone  and  it  was  the  most  dilapidated  structure  I  ever 
saw.  When  I  inquired  as  to  how  the  building  came  to  be  in  such 
a  deplorable  condition,  the  agent  explained  that  the  building  was 


38       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

fifty  years  old  and  had  been  unoccupied  for  two  years.  He  told 
me  that  the  man  who  owned  the  mortgage  had  it  now.  It  was 
known  as  the  Bum  Theatre  and  I  changed  the  name  to  Comedy. 
I  think  I  paid  about  $20,000  for  the  land  and  building. 

"While  making  extensive  repairs,  there  arose  the  necessity 
of  a  campaign  to  acquaint  the  people  of  the  neighborhood  that 
this  was  to  be  a  theatre  for  nice  people.  We  made  a  list  of 
10,000  names  of  people  living  in  that  vicinity,  and  for  ten  weeks 
we  sent  them  a  weekly  letter,  telling  them  how  this  building  was 
progressing.  The  tenth  letter  quoted  someone  as  saying  that 
the  theatre  had  been  called  the  'Bum'  because  the  people  around 
there  were  bums.  I  suggested  that  perhaps  those  who  resented 
this  reference  would  like  to  form  a  parade  in  the  main  street  of 
town  the  night  my  theatre  opened.  That  night  there  were  10,000 
people  in  that  parade.  The  theatre  did  a  terrific  business,  and  in 
a  short- space  of  time  we  paid  off  the  mortgage  and  declared 
hundreds  of  thousands  of  dollars  in  dividends." 

J|ie  next  theatre  was  the  Folly,  a  place  which  had  been  show- 
ing melodramas  and  not  doing  so  well.  W.  F.  went  to-  see  a 
member  of  the  firm,  Richard  Hyde,  who  offered  the  theatre  on 
a  ten-year  lease  for  $35,000  a  year,  and  required  a  deposit  of 
half  a  year's  rent  to  apply  to  the  last  half  year.  He  said^  he 
would  give  W.  F.  twenty-four  hours  in  which  to  make  a  decision. 
He  offered  to  put  this  option  into  writing,  but  W.  F.  said  he 
would  take  his  word.  The  option  was  to  expire  at  noon,  and 
W.  F.  was  on  hand  at  10  o'clock  with  a  certified  check  in  his 
pocket  But  meanwhile,  it  happened  some  other  motion  picture 
concern  had  got  wind  of  the  matter,  and  had  made  Hyde  an 
offer  of  $10,000  more  for  the  lease,.  Apparently  it  was  Hyde's 
idea  that  if  he  could  keep  Fox  pre-occupied  until  after  12  o'clock, 
the  deal  would  be  off.  So  he  started  telling  stories,  and  he  told 
one  after  another  without  stopping  until  11:15,  Then  W.  F. 
broke  in: 

"Just  a  minute.  I  wish  to  give  you  an  answer.  I  accept  your 
terms  and  here  is  the  check." 

Hyde  seemed  troubled,  and  became  solicitous  concerning  the 
welfare  of  his  would-be  tenant.  "You  had  better  not  be  hasty/* 
he  said,  "but  listen  to  a  man  who  has  been  in  the  business  for 
half  a  century." 


NICKELODEONS  AND  COMMON  SHOWS          39 

Hyde  called  his  bookkeeper  and  ordered  him  to  tell  W.  F. 
the  exact  truth  about  the  property.  Said  the  bookkeeper :  "Last 
year  we  took  a  loss  of  $7,500." 

Said  W.  R:  "I  am  not  interested  in  all  that,  because  the 
policy  I  am  going  to  use  in  the  theatre  is  not  the  same  as  yours, 
and  I  think  I  can  make  a  go  of  it." 

Said  Hyde:  "Darn  your  soul,  I  dislike  you!  You  are  the 
first  man  who  has  taken  my  word  in  the  last  twenty-five  years. 
I  am  known  as  a  man  who  never  keeps  his  word."  So  Hyde 
told  him  about  the  offer  of  $10,000  more.  In  closing  the  deal, 
he  made 'only  one  request:  "Wherever  you  get  a  chance  to  talk, 
be  sure  to  tell  people  I  kept  my  word  with  you/' 

This  theatre  held  about  2,000  chairs,  and  the  performance 
lasted  two  hours,  with  five  performances  a  day.  It  was  a  tre- 
mendous success,  and  during  the  first  ten  years  of  the  lease,  it 
earned  from  five  to  six  hundred  thousand  dollars  in  profit.  At 
the  expiration  of  this  lease,  Hyde  was  dead,  and  the  sons  renewed 
the  lease  to  W.  F.,  because  they  said:  "If  father  were  alive,  he 
would  want  you  to  have  that  theatre." 

W.  F.  realized  that  the. people  who  were  leasing  the  films  to 
him  were  making  ittore  money  tfiari.  he  was-.  S$  he  began  to  buy 
films,  and  became  president  of  a  concern  called  "The  Greater 
New  York  Film  Rental  Company."  Two  years  later  the  manu- 
facturers decided  to  form  a  trust,  and  set  up  a  company  known 
as  "The  Motion  Picture  Patents  Company/'  and  claimed  that 
they  owned  all  the  patents  used  in  motion  pictures.  All  the 
manufacturers  had  to  have  licenses,  and  nobody  could  get  films 
anywhere  but  from  them.  It  was  like  the  old  days  of  the  Beef 
Trust  and  the  butcher  stores.  They  set  out  to  get  possession  of 
the  business  from  top  to  bottom.  They  would  offer  to  buy  you 
odt,  and  if  you  refused  to  sell,  they  would  cancel  your  license. 
They  had  120  licensees  in  America,  and  in  a  short  time,  119  of 
them  had  been  either  bought  out  or  forced  out.  The  only  one 
left  was  William  Fox,  by  this  time  thirty  years  of  age. 

This  was  the  greatest  battle  of  his  life  so  far,  and  he  is  proud 
of  the  service  he  rendered  to  the  motion  picture  industry.  At 
that  time  it  was  completely  throttled.  The  trust  fixed  all  the 
prices  everywhere.  The  highest  price  paid  for  a  scenario  was 
$622.SCX  No  writer's  name  ever  appeared  upon  the  screen,  becattse 


40       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

they  did  not  want  anyone  to  become  popular,  and  so  have  a  chance 
to  raise  his  price.  Of  course  no  writer  of  talent  was  going  to 
work  on  that  basis.  The  salaries  of  the  actors  were  correspond- 
ingly low,  and  no  actor's  name  ever  appeared  upon  the  screen. 
So  long  as  these  conditions  continued,  motion  pictures  could 
make  no  progress  whatever. 

The  representatives  of  the  trust  sent  for  W.  R,  and  I  will  let 
him  tell  the  story  of  what  happened: 

'They  said:  We  have  been  very  kind  to  you.  We  have 
allowed  you  to  make  a  large  profit  for  the  last  two  years  by 
leaving  you  to  the  last.  Now  we  have  to  get  you  out  of  the 
way_how  much  do  you  want  for  your  plant?'  I  told  them  I 
wanted  $750,000.  They  asked  me  if  I  thought  that  that  was  what 
I  was  going  to  get,  and  I  told  them  yes.  They  told  me  to  think 
it  over  and  come  back  later.  I  came  back  the  next  day  and  still 
quoted  $750,000.  Then  they  told  me  they  had  decided  to  cancel 
my  license.  The  next  day  there  came  a  cancellation  of  my 
license  in  the  mail/' 

They  had  a  charge  against  W.  R,  whereby  they  justified  their 
decision  to  cancel  his  license.  They  charged  that  he  had  per- 
mitted their  motion  pictures  to  be  shown  in  a  house  of  prosti- 
tution in  Hoboken.  W.  F.  tells  a  curious  story  about  this  which 
illustrates  the  method  of  monopolies,  not  merely  in  the  moving 
picture  industry,  but  in  all  others  that  I  have  investigated.  It 
appears  that  W,  F/s  concern  was  supplying  pictures  to  an  exhib- 
itor in  Paterson,  New  Jersey,  and  after  the  show  the  operator 
would  bring  the  films  back  to  New  York  and  get  the  material 
for  the  next  day's  show.  It  appeared  that  the  trust  had  bribed 
this  operator  to  take  the  films  each  night  after  the  show  to  a 
house  of  prostitution  in  Hoboken,  and  the  trust  had  caused  a 
projection  machine  to  be  set  up  in  this  place  and  had  run  the  films. 

Under  the  terms  of  his  contract  with  the  trust,  they  had  been 
obliged  to  give  him  fourteen  days'  notice  before  stopping  the 
supplies  of  films,  and  he  used  that  period  to  play  a  shrewd  trick 
upon  them.  He  says: 

"I  went  back  and  suggested  that  they  tell  me  how  much  they 
would  give  me  for  my  establishment.  They  said  $75,000*  I 
sold  it.  Then  I  said,  'Now  you  have  cancelled  my  license,  I 
think  you  ought  to  reinstate  the  license,  so  that  you  have  an 


NICKELODEONS  AND  COMMON  SHOWS          41 

active  business  when  you  take  it  over  and  not  a  pile  of  junk.' 
They  thought  that  was  a  good  idea,  and  the  next  day  I  got  a 
letter  reinstating  the  license.  A  couple  days  after  that  I  said  I 
did  not  want  to  sell  out,  and  I  got  another  cancellation.  I  then 
had  grounds,  and  began  a  legal  action,  under  the  Sherman  Anti- 
trust Act/' 

This  controversy  began  in  1908  and  was  carried  to  the  Court 
of  Appeals  of  New  York  State,  and  was  not  settled  until  1912. 

"If  successful,  we  were  to  get  triple  damages.  We  were  suing 
for  $600,000  dollars  and  if  successful,  it  meant  $1,800,000.  ,One 
evening  about  8  o'clock  a  man  called  and  said  that  the  other 
people  were  offering  to  settle  out  of  court.  While  the  decision 
was  due  soon,  my  lawyer  thought  we  should  settle  out  of  court, 
as  there  was  no  assurance  that  the  decision  would  be  in  our  favor. 
We  drew  the  settlement  papers  that  night,  working  until  6  o'clock 
the  next  morning,  and  they  paid  me  $350,000.  The  next  day  it 
was  announced  that  the  case  had  been  settled.  The  judge  told 
my  lawyer  that  we  should  have  waited,  because  they  were  in 
unanimous  agreement  that  the  judgment  was  to  be  in  my  favor." 

This  was  a  suit  for  damages,  not  selling.  W.  R  got  his 
money,  and  he  still  had  his  company  and  the  right  to  do  business. 
The  manufacturers  were  not  permitted  to  cancel  the  license,  and 
were  compelled  to  market  their  films  to  William  Fox  at  the  same 
prices  as  to  their  own  company. 

The  result  of  this  campaign  was  to  put  the  film  trust  out -of 
business.  Anyone  could  make  pictures,  and  many  began  to  do 
so.  Under  competitive  conditions,  writers  and  actors  could  ask 
higher  prices  for  their  work,  and  could  demand  that  their  names 
be  advertised ;  so  reputations  could  be  built  up  and  talent  devel- 
oped. An  odd  circumstance  is  that  the  men  who  had  organized 
the  trust  were  unable  to  meet  this  new  competition,  and  within 
five  years  none  of  those  who  had  fought  William  Fox  were  any 
longer  in  the  business. 

All  these  four  years  W.  F,  had  been  going  ahead  with  the 
leasing,  buying  and  building  of  theatres,  and  turning  them  into 
motion  picture  "palaces."  When  you  were  running  a  regular 
theatrical  production,  you  had  as  a  rule  only  one  company,  and 
drew  your  audience  from  all  over  the  city.  But  for  these  10-cent 
theatres,  you  drew  the  people  of  the  neighborhood,  and  since 


42       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

you  could  make  hundreds  of  prints  of  the  film,  you  couM  have 
a  theatre  in  every  neighborhood;  you  could  have  a  chain  of 
theatres  all  over  New  York  and  Brooklyn  and  the  suburbs— it 
was  a  series  of  gold  mines,  and  the  deeper  you  dug  into  these 
mines,  the  richer  became  the  vein.  The  quality  of  the  films 
became  better,  and  a  better  class  of  people  would  come  to  see 
them.  It  became  possible  to  have  real  "palaces" ;  to  spend  money 
on  theatre  decorations,  and  charge  15  cents,  25  cents,  even  50 
cents  admission. 

In  the  case  of  the  City  Theatre,  Fourteenth  Street  between 
Third  and  Fourth  avenues,  W.  R  put  in  one-fourth  of  the 
money;  two-fourths  of  the  remaining  interest  were  taken  by  the 
two  Timothy  Sullivans,  prominent  leaders  of  Tammany  Hall, 
known  as  "Big  Tim"  and  "Little  Tim."  The  total  amount 
invested  was  $100,000,  and  the  building  was  to  cost  $300,000. 
Big  Tim  produced  a  contractor  who  offered  to  do  the  rest  of 
the  financing,  taking  SO  per  cent  of  his  money  in  cash  each 
month,  and  taking  a  six  months'  note  for  the  other  SO  per  cent, 
agreeing  to  renew  these  notes  for  an  additional  six  months.  In 
this  way  the  theatre  would  be  making  money  before  the  first  of 
the  notes  became  due. 

The  work  proceeded,  and  at  the  end  of  the  first  six  months 
there  was  a  note  for  $10,000  falling  due  at  the  Colonial  Bank. 
W.  F,  received  a  notice  from  the  bank,  and  set  out  to  find 
Mahoney,  the  contractor,  and  take  him  to  the  bank  to  renew 
the  note.  For  days  W.  F.  hunted  for  Mahoney  but  Mahoney 
could  not  be  found.  Then  W.  F.  went  to  Big  Tim,  who  saw  no 
reason  to  worry;  it  was  Mahoney's  problem,  not  Tim's,  W.  F. 
couldn't  understand  this  attitude,  but  realized  after  a  while  that 
Big  Tim  was  accustomed  to  signing  notes  quite  freely ;  it  meant 
no  more  to  him  than  slapping  somebody  on  the  back ;  it  was  part 
of  his  stock  in  trade  as  a  politician.  Nobody  who  wanted  to  go 
on  doing  business  in  New  York  City  would  ever  dream  of  suing 
Big  Tim  Sullivan  on  a  note. 

But  it  was  different  with  a  little  fellow  like  William  Fox. 
He  had  never  had  a  note  go  to  protest,  and  it  seemed  to  him 
the  most  terrible  thing  in  his  whole  life.  For  a  week  before  the 
note  was  due,  he  worried  Big  Tim,  but  in  vain.  Then  he  went 
to  the  Colonial  Bank  and  presented  himself  to  the  president, 


NICKELODEONS  AND  COMMON  SHOWS          43 

Mr.  Walker.  W.  F.  laid  $2,500  upon  the  banker's  desk  and 
asked  the  banker  to  release  him  from  his  share  of  the  obligation. 
But  Walker  couldn't  see  it  that  way.  Under  the  law,  each  of 
the  signers  was  responsible  for  the  full  amount.  As  for  W.  F.'s 
statement  that  Mahoney  had  agreed  to  renew  the  note,  Walker 
said  he  didn't  want  to  know  anything  about  that.  Probably  he 
thought  it  was  just  a  bluff.  Anyhow,  he  refused  to  take  the 
$2,500,  and  when  W.  F.  insisted,  he  brushed  it  onto  the  floor,  and 
when  W.  F.  went  on  insisting,  he  pressed  a  button,  and  a  man  in 
a  gray  uniform  appeared  and  gently  escorted  the  protestor  to 
the  door. 

W.  F.  had  until  3  o'clock  that  afternoon  to  save  his  good 
name,  and  he  was  in  a  terrible  state.  He  called  Walker  on  the 
telephone  and  heard  him  hang  up  the  receiver.  Then  he  waited 
outside  the  building,  hoping  that  Walker  would  come  out  to 
lunch,  but  1  o'clock  came,  and  W.  F.  saw  a  tray  carried  in,  and, 
peering  through  a  window  of  the  bank,  he  saw  Walker  seated 
at  his  desk  eating  his  lunch. 

"Then  I  noticed  him  light  his  pipe.  I  have  always  known 
that  a  man  with  a  full  stomach  is  in  a  better  humor  than  with 
an  empty.  Back  to  Walker's  office  I  went,  and  my  presence 
caused  the  man  to  go  into  a  convulsion.  He  yelled,  'Get  out !' 
and  this  time  two  men  came  in  and  just  threw  me  out.  Mr. 
Walker  could  see  me  from  the  window  standing  outside,  because 
from  time  to  time  I  would  rap  on  the  window  to  let  him  know 
I  was  there.  Finally  I  saw  the  clock  hands  turn  to  three.  I 
had  endorsed  this  note  in  good  faith  and  it  was  to  be  protested. 
I  knew  of  no  humiliation  in  my  whole  career  greater  than  at 
3  o'clock  that  day." 

But  it  turned  out.  all  right,  as  Mahoney  appeared  the  next 
day,  and  the  note  was  renewed,  arid  the  City  Theatre  was  com- 
pkt&J,  and  opened  with  the  "Zeigfeld  Follies  of  1910."  It  was 
a  loss  from  the  beginning,  and  presently  the  theatre  was  closed, 
and  W.  F.  leased  it  from  his  associates  for  $75,000  a  year,  and 
put  moving  pictures  into  it,  and  it  has  been  making  a  profit  of 
$45,000  a  year  ever  since. 

There  is  another  story  having  to  do  with  this  president  of 
the  Colonial  Bank ;  and  W.  F.  laid  stress  upon  this  story,  saying : 
"I  want  you  to  see  that  there  is  a  difference  in  bankers." 


44       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

W.  F.  thinks  that  a  banker  is  all  right  when  he  is  really  a 
banker,  and  the  trouble  only  begins  when  he  ceases  to  ^  be  a 
banker,  and  becomes  a  speculator  and  promoter,  or  a  conspirator 
and  bandit.  Throughout  this  period  of  his  career,  W.  F.  dealt 
with  bankers,  who  looked  into  his  business  affairs,  judged  his 
character,  and  loaned  him  money  with  which  to  buy  and  rent 
new  theatres,  or  to  put  up  new  buildings.  If  the  buildings  cost 
a  little  more  than  was  expected,  or  if  it  took  a  little  longer  to 
finish  them,  they  cheerfully  renewed  his  notes,  and  in  due  course 
he  opened  his  theatres,  and  the  public  came  pouring  into  them, 
and  he  paid  off  his  notes  at  the  banks  with  the  agreed  amount 
of  interest.  That  is  W.  F.'s  conception  of  what  banking  should 
be,  and  if  all  the  bankers  had  been  like  that,  he  would  never 
have  come  to  Upton  Sinclair  to  write  the  story  of  his  career. 

Late  in  1912  and  early  in  1913,  W.  F.  conceived  the  idea 
of  larger  and  more  beautiful  houses  for  the  new  motion  picture 
art.  One  was  to  be  the  Audubon,  on  Broadway  near  165th  Street, 
and  the  other  was  to  be  on  Tremont  Avenue  in  the  Bronx.  He 
had  at  this  time  half  a  million  dollars  in  cash,  and  this  was  to 
be  the  largest  venture  of  his  career.  There  were  to  be  stores 
in  connection  with  the  theatres,  and  when  the  construction  was 
half  completed,  it  was  found  that  the  cost  would  be  nearly  twice 
as  much  as  had  been  expected.  Money  was  very  tight  at  this 
time,  and  W.  F.  found  himself  chasing  about  the  city  trying  to 
borrow  some.  It  was  the  story  of  the  sandwiches  and  pretzels 
and  buffalo  pans  all  over  again — if  he  couldn't  find  the  money, 
he  would  lose  the  buildings.  Let  him  tell  the  story  himself : 

"One  day  while  I  was  in  this  quandary,  trying  to  see  or  find 
a  way  out,  the  man  who  had  the  plaster  contract  of  these  build- 
ings called  on  me.  He  told  me  he  was  in  trouble  and  that  I 
could  help  him  out.  You  can  imagine  my  feelings  as  I  realized 
that  he  must  have  come  for  his  money.  He  said;  'I  know  I 
haven't  any  right  to  ask  you  to  pay  rne  in  advance,  but  if  you 
could  give  me  a  note  for  four  months  instead  of  paying  me  on 
the  fifteenth,  I  would  be  very  grateful/  What  a  load  fell  from 
my  shoulders  at  his  words !  Of  course  I  gave  him  the  note  and 
he  gave  me  the  receipted  bill.  It  seemed  that  he  must  have  spread 
the  word  around  because  one  by  one  the  contractors  called  and 
asked  for  notes.  The  same  thing  occurred  every  month  until 


NICKELODEONS  AND  COMMON  SHOWS          45 

the  buildings  were  completed  and  opened,  which  was  inside  of 
four  months,  and  before  the  first  payment  came  due  on  these 
notes. 

"One  day  one  of  the  contractors  asked  if  I  knew  Mr.  Walker, 
the  president  of  the  Colonial  Bank,  and  if  I  had  ever  done  any 
business  with  him.  I  told  him  I  was  sorry  to  admit  I  had  not 
been  successful  in  my  attempt  to  do  business  with  him.  He 
suggested  that  I  go  around  to  the  bank  and  see  him,  and  he  would 
say  no  more.  I  was  mystified.  I  called  on  Mr.  Walker.  He 
remembered  me  and  asked  how  I  was  getting  along.  I  told 
him  the  whole  story.  He  said,  Then  you  have  no  worries/  I 
said,  'Yes,  I  have,  as  the  first  notes  are  soon  due,  and  I  am  no 
better  off  now  than  the  day  I  gave  them  as  the  theatres  are  only 
just  opened/  He  rang  the  bell  (not  the  same  bell  he  rang  on 
the  previous  occasion  to  have  me  thrown  out)  and  a  young  man 
brought  in  an  envelope.  He  said :  'Here  are  $250,000  worth  of 
those  notes.  The  other  $150,000  worth  are  with  the  Nassau 
Bank.  I  knew  you  were  in  trouble  and  sent  those  contractors 
to  you/  When  I  asked  him  why  he  had  done  that,  he  replied : 
'I  became  interested  in  you  that  day  three  years  ago  when  you 
put  up  such  a  battle  to  keep  your  name  from  going  to  protest. 
Now  it  happens  that  I  live  across  the  street  from  the  Audubon 
Theatre  and  early  every  morning  during  its  construction  I  could 
see  you  from  my  window  watching  the  work  in  progress,  and 
it  made  me  dizzy  to  see  you  climbing  around  on  the  scaffolding. 
And  many  nights  I  saw  your  white  roadster  circling  the  property. 
I  felt  that  a  man  so  zealous  of  his  good  name  and  so  untiring 
and  conscientious  in  his  endeavors  was  a  good  risk  and  a  good 
investment.  Take  your  time  and  pay  it  back  when  convenient/ 

"Within  a  year  after  that  I  had  paid  that  debt  all  off.  One 
of  those  places  opened  Thanksgiving  Eve  and  the  other  a  few 
days  before  Christmas,  in  1913/* 


REEL  FIVE 

THE  ROAD  TO  FORTUNE 

WE  find  William  Fox  now  with  a  chain  of  moving  picture 
"palaces"  of  all  sizes  in  and  about  New  York,  and  with 
hundreds  of  thousands  of  people  coming  every  night  to  see  what 
he  has  to  show  them.  He  has  organized  a  concern  called  "The 
Box  Office  Attractions  Film  Rental  Company"  to  buy  and  lease 
films  for  the  Fox  and  other  theatres ;  and  his  main  trouble  is  to 
£nd  suitable  films.  He  has  come  to  feel  that  he  has  a  personal 
relationship  with  each  of  these  patrons  who  pay  him  a  dime  or 
perhaps  a  quarter.  If  the  patron  likes  the  product  he  will  come 
again,  and  perhaps  bring  his  family;  but  some  of  the  pictures  are 
"orf  color/'  and  the  patron  who  sees  these  pictures  may  refuse  to 
bring  his  family.  Says  W.  F. :  "I  knew  how  little  diversion  or 
entertainment  it  was  my  good  fortune  to  receive  from  the  time 
J  was  twenty-two.  All  these  years  I  craved  something  more  than 
just  eating,  sleeping  and  working,  but  I  had  missed  it.  And  now 
the  thing  that  attracted  me  to  this  picture  business  was  that  I 
was  able  to  give  the  pleasure  to  someone  else,  I  was  rather 
inspired.  I  had  a  feeling  that  I  was  doing  something  just  a  little 
bit  more  than  making  money.  I  was  putting  entertainment  and 
relaxation  within  the  reach  of  all/' 

The  Box  Office  Attractions  Film  Rental  Company  began  to 
manufacture  pictures.  The  first  one  was  called  "Life's  Shop  Win- 
dow/' and  its  cost  was  six  thousand  dollars,  a  liberal  sum  in  those 
days.  It  was  made  from  a  popular  novel,  supposed  to  be  a 
naughty  book.  But  for  film  purposes  it  was  made  moral,  and 
then,  unfortunately,  there  was  nothing  left  of  it. 

The  second  picture  was  "St.  Elmo/'  by  Augusta  J.  Evans. 
The  heroine  is  a  humble  village  girl,  the  blacksmith's  grand- 
daughter, and  she  quotes  long  passages  of  Latin  to  the  villain ; 
also  she  swoons  frequently.  The  Box  Office  Attractions  Film 

46 


THE  ROAD  TO  FORTUNE  47 

Rental  Company  kept  the  swoons,  but  omitted  the  Latin.  By  this 
time  movie  heroines  had  five  reels  in  which  to  do  their  swooning, 
brought  on  by  tight  lacing  to  acquire  the  wasp-waist  line. 

In  the  meantime  the  public  was  manifesting  such  interest  in 
this  new  art  of  motion  pictures  that  illustrated  songs  and  vaude- 
ville were  passing.  The  nickelodeons  and  penny  arcades  had  been 
long  since  forgotten,  likewise  the  fire-eaters,  sword-swallowers 
and  coin-manipulators.  The  movies 'were  advancing  to  their  place 
among  the  half  dozen  biggest  industries  of  America. 

At  this  point  we  must  stop  and  go  back  to  renew  our  acquaint- 
ance with  Eve  Leo.  We  left  her  on  the  day  of  her  wedding.  She 
and  her  bridegroom  set  up  in  a  five-room  flat  on  Myrtle  Avenue 
in  Brooklyn,  at  a  rental  of  $11  per  month.  It  was  one  of  the 
old-fashioned  "railroad  type"  of  flat  and  W.  F.  describes  it  as  a 
veritable  doll's  house. 

"From  the  beginning  Mrs.  Fox  made  our  home,  no  matter 
how  simple,  a  heaven  for  me ;  her  artistic  fingers  made  everything 
she  touched  beautiful.  I  can  see  it  now  with  those  dainty  swiss 
curtains  and  cretonne  hangings  at  the  windows,  with  cushions 
here  and  there  to  match,  and  beautiful  panels,  reproductions  of 
great  masterpieces  given  away  with  coupons  of  Babbit's  soap, 
which  she  had  framed  to  adorn  our  walls.  We  still  have  our  old 
"Le  Brun  and  Child"  in  our  bedroom,  from  our  first  home  during 
those  days.  It  has  been  a  sort  of  mascot  all  these  years." 

When  prosperity  began  coming  to  W.  F.,  someone  offered  him 
a  real  estate  bargain  in  the  form  of  a  tenement  house.  It  was 
only  $12,000,  and  $11,000  of  that  was  mortgage,  so  he  took  it, 
and  got  a  marvelous  thrill  out  of  being  a  landlord  at  the  age  of 
twenty-three.  But  the  thrill  soon  vanished,  as  he  had  no  time 
to  collect  the  rents,  and  turned  the  job  over  to  his  wife.  Then 
he  made  the  sad  discovery  that  there  weren't  many  rents,  for  the 
tenants  found  out  that  a  hard  luck  story  would  touch  the  kind 
heart  of  their  landlady.  W.  F.  decided  that  the  business  of  being 
a  landlord  was  not  as  glorious  as  he  imagined,  and  he  sold  the 
tenement  at  a  still  greater  bargain. 

Some  time  later  the  Fox  motion  picture  company  required  a 
scenario  department,  and  so  we  find  Eve  trying  to  be  that  depart- 
ment. In  the  early  days  of  the  industry  there  were  no  "execu- 
tives," such  as  you  now  read  about.  At  that  time  all  the  pictures 

.5 


48       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

were  made  in  New  York,  and  when  W.  F,  wanted  a  story,  he 
would  have  to  find  one  himself.  One  can  readily  imagine  that 
through  all  his  struggles  he  had  very  little  time  to  read.  But 
there  was  his  wife  who  had  read  incessantly.  She  would  tell  him 
a  story  which  she  had  been  reading,  and  the  next  day,  when  he 
went  to  the  studio,  he  would  talk  it  off  to  a  stenographer,  or 
maybe  tell  it  to  the  director,  and  between  them  they  would  put  it 
into  continuity,  and  after  they  had  selected  the  actors,  they  would 
tell  it  to  the  actors.  All  day  directors  and  actors  would  work,  and 
in  the  evening  there  would  be  the  "rushes,"  and^  W.  F.  would 
inspect  them;  before  long  his  wife  took  to  coming  down  and 
watching  these  "rushes,"  and  helping  him  to  judge  whether  their 
dramatic  quality  had  been  fully  developed.  If  there  was  any- 
thing wrong,  never  did  she  say  it  in  the  presence  of  any  other 
person,  but  took  her  husband  aside  and  made  her  suggestion. 
That  is  the  way  to  be  a  tactful  wife !  Says  W.  F. : 

"For  five  years  no  one  knew  the  work  she  was  doing,  for 
when  the  scenarios  were  submitted,  I  would  pack  them  up  every 
evening  and  bring  them  home  to  my  wife.  I  remember  one  story 
being  rejected  by  her,  and  the  writer  of  the  story  then  wrote  me 
a  letter,  saying  that  his  story  had  just  been  returned  marked 
'rejected/  but  this  was  the  greatest  story  he  had  ever  written,  and 
proved  that  my  scenario  department  was  in  the  hands  of  incom- 
petents, and  he  would  recommend  that  I  immediately  dismiss  the 
party  who  rejected  the  story/' 

When  the  picture  was  finished  and  cut,  the  titles  had  to  be 
written,  and  Mrs.  Fox  would  help  with  that.  So  began  the  regime, 
under  which  the -canary  bird  at  home  had  to  learn  to  wake  up  in 
the  small  hours  of  the  morning.  Says  W,  F. : 

"It  was  not  a  rare  occasion  that  we  both  left  the  building  at 
five-thirty  or  six  in  the  morning.  When  we  were  leaving,  it  was 
just  about  time  for  the  job  to  open  again.  Even  if  we  took  a  brief 
vacation  at  Atlantic  City,  the  rushes  would  be  brought  down  to 
me  every  night,  and  in  the  morning  we  would  sit  in  some  theatre 
and  view  them.  I  earned  what  I  got ;  in  fact  I  earned  more  than 
I  got,  because  the  first  year  under  contract  my  salary  was  $1,000, 
and  for  the  next  four  years  I  was  to  get  $10,000." 

When  you  marry  a  young  man  who  is  going  into  the  cloth 
examining  and  shrinking  business,  you  are  presumably  not  expect- 


THE  ROAD  TO  FORTUNE  49 

ing  a  very  romantic  or  exciting  life ;  it  must  have  been  a  startling 
thing  to  Eve  Leo  when  in  the  course  of  two  or  three  years  this 
prosaic  source  of  livelihood  was  exchanged  for  a  nickelodeon, 
and  then  for  a  "common  show,"  and  then  for  a  string  of  125 
shows,  and  then  for  vaudeville  theatres  and  whole  chains  of 
motion  picture  "palaces" — all  of  them  like  hungry  birds  in  a  nest, 
lifting  their  big  heads  and  opening  wide  their  beaks  and  clamoring 
for  food.  The  Box  Office  Attractions  Film  Rental  Company  had 
to  have  more  pictures,  and  pictures  meant  stories;  so  Eve  Leo 
must  hasten  to  read  novels,  or  she  must  rack  her  memory  for  the 
novels  she  had  read  years  ago — little  dreaming  how  she  would 
coin  this  reading  into  a  fortune ! 

This  went  on  for  many  years.  They  lived  uptown,  in  the 
suburbs,  and  each  night  or  early  in  the  morning  while  they  were 
driving  home,  Mrs.  Fox  would  tell  another  story,  and  they  would 
discuss  changes  in  it,  and  perhaps  make  it  all  over.  A  few  stories 
they  bought  from  authors,  but  most  of  them  they  took  out  of  the 
"common  domain/'  as  the  copyright  decisions  phrase  it,  meaning 
works  upon  which  the  copyright  had  expired.  They  made  Ouida's 
"Under  Two  Flags"  and  Dickens'  "A  Tale  of  Two  Cities."  Also 
that  well-known  classic  "Les  Miserables."  I  remember  when  I 
was  a  boy,  one  of  my  schoolmates  read  it  and  told  me  that  he 
couldn't  see  why  they  were  called  "Less  Miserables,"  because  it 
seemed  to  him  they  were  more  miserable  when  they  finishd  than 
when  they  began. 

The  time  came  when  the  scenario  department  became  too  big 
for  one  woman  and  as  others  were  engaged  for  the  various 
departments,  Mrs.  Fox  lost  her  job.  She  lost  several  jobs  in  the 
course  of  her  life,  she  told  me.  Her  first  had  been  the  tying  of 
her  husband's  necktie  each  morning.  It  seems  that  when  W.  F. 
was  a  boy,  he  fell  off  a  truck  and  broke  his  left  arm,  and  an 
unskilled  surgeon  took  out  the  elbow  joint,  and  so  this  arm  is 
crippled  and  his  wife  had  to  tie  his  ties.  But  after  a  while,  it 
occurred, to  him  that  this  was  an  imposition  and  he  began  to 
practice  and  soon  learned  to  do  it  with  one  hand.  So  Eve  lost 
her  first  job.  Her  second  job  was  brushing  his  hair  artistically, 
in  an  effort  to  cover  his  growing  bald  spot;  but  as  the  years 
passed,  this  effort  became  hopeless.  The  third  was  the  scenario 
department;  the  fourth  was  the  job  of  decorating  the  Fox  the- 


50       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

atres,  which  was  lost  when  the  enemies  of  William  Fox  took  the 
Fox  Theatres  Corporation  from  him,  and  ran  it  into  bankruptcy, 
as  we  shall  see. 

The  quality  of  moving  pictures  produced  by  the  Box  Office 
Attractions  Film  Rental  Company,  and  later  by  the  Fox  Film 
Corporation,  was  a  matter  of  importance  to  the  public,  and  it  is 
a  matter  of  importance  to  this  narrative.  Altogether  there  were 
produced,  under  the  initiative  and  direction  of  William  Fox,  a 
total  of  750  pictures.  In  discussing  the  matter  with  me,  he  made 
the  statement,  "Some  of  them  were  good  and  some  of  them,  I 
suppose,  were  very  bad/'  It  seems  to  me  that  this  statement 
may  be  accepted  by  all  parties ;  the  rest  would  be  a  question  of 
percentages.  Certainly,  no  one  who  saw  "Sunrise,"  "What  Price 
Glory,"  "Four  Sons/'  and  "A  Yankee  at  the  Court  of  King 
Arthur,"  will  deny  that  William  Fox  produced  some  good  pic- 
tures. On  the  other  hand,  when  I  read  titles  such  as  "Her  One 
Mistake,"  "Flames  of  the  Flesh,"  "The  She  Tiger,"  "The  Splen- 
did Sin,"  "The  Sin-Sister,"  "Love  Makes  'Em  Wild,"  "Ankles 
Preferred,"  and  "Girls  Gone  Wild,"  I  feel  quite  certain  that  he 
produced  a  number  of  bad  ones. 

Little  Will  Fox  left  school  at  the  age  of  eleven,  and  began 
working  in  a  clothing  factory  to  help  support  his  parents,  and  to 
save  half  his  young  brothers  and  sisters  from  the  death  which 
took  the  other  half.  He  peddled  stove-blacking,  "lozengers," 
umbrellas,  sandwiches  and  pretzels,  buffalo  pans,  and  Weber  & 
Fields  jokes,  and  in  none  of  these  occupations  was  there  any 
opportunity  to  acquire  familiarity  with  "the  best  that  has  been 
thought  and  felt  in  the  world."  If  you  had  wanted  true  culture 
in  moving  pictures,  you  would  have  had  to  get  them  from  men 
with  a  different  sort  of  training.  But  you  believed  in  the  sacred 
principle  of  American  individualism — which  meant  that  Edison's 
new  invention  was  flung  out  into  the  market-place,  to  be  scrambled 
for  by  those  who  had  the  quickest  wit  and  the  highest  skill  in  the 
picking  up  of  nickels  and  dimes.  So  presently  you  had  "The  Life 
of  an  American  Fireman,"  and  "The  Great  American  Train 
Robbery,"  and  "The  Runaway  Wagon,"  and  "The  Automobile 
Thieves" ;  then  presently  you  had  "Life's  Shop  Window,"  and  "St. 
Elmo,"  and  "Bertha  the  Sewing  Machine  Girl,"  and  "No  Mother 
to  Guide  Her,"  and  "The  Face  on  the  Barroom  Floor,"  and  "Silk 


THE  ROAD  TO  FORTUNE  51 

Legs/'  and  "Plastered  in  Paris."  You  had  a  swarm  of  men  rush- 
ing to  rent  stores  and  install  projection  machines — the  clothing 
merchant,  Laemmle,  and  the  band-musician,  Lasky,  and  the  shoe- 
maker, Warner,  and  the  fur-dealer,  Zukor,  and  the  jack-of -all- 
trading,  William  Fox,  who  spent  most  of  his  time  reading  con- 
tracts and  inspecting  the  weekly  reports  of  theatre  earnings. 

I  questioned  him  closely  about  the  sources  of  his  culture, 
because  he  passed  it  on,  not  merely  to  a  hundred  million  Ameri- 
cans, but  to  other  hundreds  of  millions  in  Borneo  and  Iceland 
and  Patagonia.  My  wife  and  I  went  one  day  to  a  picture  show, 
and  it  was  a  Fox  show — there  was  a  time  in  our  home  city  when 
you  couldn't  attend  anything  but  a  Fox  show,  because  W.  F. 
bought  the  West  Coast  Theatres  Corporation,  which  included  all 
the  theatres  in  Pasadena,  and  all  the  leading  theatres  In  eleven 
states  west  of  the  Rocky  mountains.  We  saw  a  newsreel  of  some 
men  climbing  a  tremendously  high  mountain  covered  with  snow. 
It  might  have  been  Rainier  in  Washington,  or  Popocatepetl  in 
Mexico,  or  Kinchinjunga  in  the  Himalayas — anyhow,  there  they 
were,  toiling  up  through  endless  snow  and  ice,  and  when  they  got 
to  the  top,  they  accomplished  their  purpose,  which  was  to  unfurl 
to  the  wind  a  banner  reading :  "Fox  Film" 

There  were  such  banners  in  every  country  you  could  name, 
and  W.  F.  thinks  that  in  all  these  places  there  will  be  people 
curious  to  read  this  book;  his  prediction  concerning  its  future 
sales  reads  like  Colonel  Sellers  calculating  the  market  for  spec- 
tacles among  the  natives  of  Africa.  Regarding  his  purpose  and 
attitude  from  the  beginning,  he  says : 

"The  first  theatre  had  146  chairs.  It  was  strictly  a  commercial 
proposition.  I  was  looking  for  an  outlet  for  my  business  acumen 
which  hadn't  found  sufficient  expression  in  the  cloth  examining 
and  shrinking  business.  I  gradually  acquired  a  chain  of  125  the- 
atres and  during  this  pdtlod  the  commercial  element  was  still 
uppermost.  But  as  I  became  established  and  expanded  my  busi- 
ness, and  life  was  no  longer  merely  a  battle  to  survive,  my 
thoughts  changed.  I  reached  the  period  in  1912  or  1913  where  I 
found  myself  with  $500,000  in  cash  that  I  wanted  to  invest  and 
I  realized  that  there  was  a  great  deal  more  in  life  than  just  mak- 
ing money.  What  concerned  me  far  more  was  to  make  a  name 
that  would  stand  for  the  finest  in  entertainment  the  world  over. 


52       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

I  strove  to  provide  more  luxurious  theatres  than  before  and  to 
refine  the  entertainment  that  we  presented.  I  would  not  allow 
anything  on  the  stage  or  screen  I  was  unwilling  to  have  my  wife 
and  daughters  see.  Many  a  picture  that  I  had  contracted  for  and 
would  have  to  pay  for  whether  I  used  it  or  not,  was  shelved  on 
this  account.  You  see,  popular  entertainment  at  this  time  was 
little  above  the  crude  burlesque  stage,  which  had  been  all  right 
for  men,  but  now  our  audiences  were  made  up  of  men  and 
women  too." 

An  important  part  of  W.  F/s  training  he  seemingly  had  for- 
gotten, until  I  dug  it  out  of  his  memory.  In  the  year  1910,  he 
leased  the  old  Academy  of  Music,  a  large  and  famous  show-place 
on  Fourteenth  Street  and  Waverly  Place,  the  opera  house  of  New 
York  and  the  center  of  its  social  life  in  the  days  of  our  grand- 
fathers. It  was  the  home  of  Denrnan  Thompson,  who  played  "The 
Old  Homestead"  when  I  was  a  child,  and  gave  me  the  keenest 
delight  which  I  can  remember  in  the  theatre.  It  is  just  as  vivid 
in  my  mind  as  if  I  had  seen  it  yesterday— the  famous  scene  rep- 
resenting Grace  Church  with  the  chimes,  and  the  old  countryman 
who  comes  to  town  and  wants  to  mail  a  letter  to  his  family,  and 
is  told  to  drop  it  into  the  post-box.  He  does  so,  and  then  stands 
and  gazes  in  awe,  and  says :  "I  wonder  if  it's  got  there  yet."  Then 
comes  the  postman,  collecting  the  letters,  and  the  old  farmer 
jumps  upon  him,  shouting  "Stop,  thief!"  Also  I  remember  a 
production  called  "The  Black  Crook,"  which  shocked  everybody 
in  New  York  because  the  leading  lady  danced  in  black  tights.  ^ 

Well,  W.  F.  leased  this  theatre,  and  here  was  a  grave  social 
and  artistic  responsibility.  He  had  to  pay  $100,000  a  year  rent, 
and  at  the  same  time,  he  had  to  produce  dramas  worthy  of  the 
traditions  of  the  ancient  institution.  Never  would  it  do  to  put 
moving  pictures  into  the  old  Academy  of  Music  where  King 
Edward  VII  had  been  entertained  at  a  jgrand  state  ball  I 

He  tried  a  stock  company,  producing  fifty-two  plays,  a  year, 
the  admission  10,  20  and  30  cents.  He  carried  out  this  program 
for  three  years,  and  attended  rehearsals  and  watched  the  plays. 
He  had  his  office  right  across  the  street,  which  made  it  possible' 
to  devote  a  great  deal  of  time  to  this  branch  of  production,  and 
it  was  here  that  he  got  most  of  his  schooling  and  experience  in 
the  drama. 


THE  ROAD  TO  FORTUNE  53 

At  the  end  of  the  year  1912,  he  had  lost  $380,000  in  attempt- 
ing to  conform  to  the  traditions  of  the  Academy  of  Music,  He 
then  went  up  to  Boston  to  see  the  owners  of  the  property,  and 
told  them  that  he  was  through.  He  would  rather  forfeit  the 
$100,000  he  had  paid  as  rental  for  the  last  year  of  the  ten-year 
lease  than  continue  a  losing  proposition.  As  he  started  to  walk 
away,  one  of  the  owners  called  him  back  "What  do  you  expect 
us  to  do  with  this  theatre  if  you  who  are  in  the  business  couldn't 
make  a  go  of  it — what  do  you  expect  us  to  do  ?" 

W.  F.  told  them  that  he  had  a  plan  in  his  mind,  but  hadn't 
wanted  to  give  it  to  them  until  they  asked  for  it.  There  were 
two  things  to  be  done :  the  rental  must  be  reduced  by  one-third  ; 
and  the  $100,000  which  W.  F.  had  just  turned  over  to  the  owners 
must  be  used  to  tear  down  the  blank  walls  of  the  building  which 
fronted  all  the  way  on  Fourteenth  Street,  and  the  grass  plot  in 
front  of  the  wall  must  be  turned  into  a  row  of  stores.  This  was 
agreed  to,  and  another  ten-year  lease  was  made,  and  W.  F.  went 
back  to  try  another  experiment  with  the  Academy  of  Music. 

He  was  just  then  making  his  decision  to  go  into  the  business 
of  manufacturing  pictures.  He  was  going  to  tise  his  stock  com- 
pany for  that  purpose,  and  sent  his  director,  J.  Gordon  Edwards, 
to  Europe,  where  they  were  making  good  pictures,  to  learn  how 
it  was  done.  In  the  meantime,  the  Academy  was  dark,  and  one 
day  W.  F.  was  sitting  in  a  restaurant  across  the  way,  when  a 
man  came  over  and  persuaded  him  that  he  had  a  musical  comedy 
that  would  be  a  big  hit  at  $1.00.  The  Academy  stage  was  big 
enough  for  a  large  production.  Says  W.  F, : 

"Before  long  he  had  sold  me  the  idea.  On  the  opening  night 
the  house  was  sold  out.  After  the  first  act,  the  applause  seemed 
unending.  There  were  a  half  a  dozen  curtain  calls.  In  the  rear 
foyer  my  friends  were  congratulating  me  and  telling  me  it  was 
the  greatest  show  they  ever  saw.  I  noticed  one  man  standing  in 
the  corner,  with  a  big  cigar  in  his  mouth  and  a  black  hat  pulled 
down  over  his  eyes.  He  nodded  his  head  for  me  to  come  over 
and  asked;  'What  are  they  telling  you?'  I  told  him. 

"Then  he  asked  me  if  I  believed  them,  and  I  replied,  *Yes. 
The  applause  indicated  that/  He  then  told  me  it  was  the  worst 
thing  he  had  ever  sat  through.  He  said,  'Come  back  tomorrow 
and  listen  to  the  remarks  of  strangers  if  you  want  to  know  the 


54       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

truth.  Don't  listen  to  your  friends.'  The  next  afternoon  I  took 
his  advice,  and  what  I  heard  coincided  with  his  criticism.  Before 
the  show  was  over  there  were  only  a  few  people  left ;  the  rest 
had  walked  out.  At  the  end  of  the  week  we  rang  the  curtain 
down  on  about  $75,000." 

That  was  the  last  effort  to  save  the  traditions  of  the  old 
Academy  of  Music.  It  was  turned  into  a  picture  house,  and 
after  that,  like  all  the  other  Fox  theatres,  it  made  money. 

There  is  one  more  story  of  the  old  Academy  days :  W.  F/s 
introduction  to  the  Prince  of  Wales.  This  celebrity  visited  the 
United  States  in  1921,  and  W.  F.,  the  best  of  showmen,  recalled 
the  tradition  that  the  grandfather  of  the  Prince  had  been  enter- 
tained at  the  Academy  of  Music  Wouldn't  the  grandson  like  to 
come  to  the  theatre  and  occupy  the  same  chair  in  which  his  fore- 
father sat?  The  committee  in  charge  of  arrangements  accepted 
the  invitation  and  this  is  what  happened  to  W.  F. : 

"Several  days  before  the  Prince  of  Wales  arrived,  a  member 
of  his  committee  visited  my  office  and  told  me  what  I  should  wear 
on  this  great  occasion,  and  rehearsed  the  manner  in  which  I  was 
to  receive  the  Prince,  saying  that  if  he  offered  to  shake  hands 
with  me,  I  was  to  put  no  pressure  in  the  handclasp  but  let  my 
hand  rest  lightly  in  his.  And  having  escorted  the  royal  visitor  to 
his  box,  I  was  to  make  a  graceful  exit. 

"Finally  the  day  came  when  the  Prince  of  Wales  arrived. 
Fox  News  cameras  had  followed  him  on  his  travels  from  the 
time  he  left  England  until  his  arrival  at  the  Academy.  We  rushed 
these  reels  through  and  were  ready  in  time  for  the  show.  Invita- 
tions had  been  sent  to  the  old-time  New  Yorkers  who  had 
attended  the  reception  to  the  former  Prince,  later  King  Edward. 
There  were  fifty  or  more  and  they  were  delighted  to  attend.  The 
Prince  was  received  in  the  grand  foyer  of  the  theatre  by  twenty- 
four  debutantes,  the  blue  blood  of  New  York.  They  wore  period 
costumes,  crinoline  and  white  wigs,  and  made  a  beautiful  picture. 

"When  I  met  the  Prince  of  Wales,  he  seemed  a  very  genial 
and  democratic  sort  of  person  and  I  liked  him*  I  liked  the  pres- 
sure of  his  handclasp  and  I  returned  it.  He  was  so  natural,  I 
forgot  my  instructions  to  address  him  as  "Your  Highness"  and 
found  myself  saying,  "Prince,  I  am  happy  to  meet  you,  and  I 
wish  to  express  my  thanks  for  accepting  the  invitation/*  When 


THE  ROAD  TO  FORTUNE  55 

we  reached  the  box,  I  said,  This  ends  my  part  of  the  perform- 
ance, as  I  have  been  instructed  by  your  committee  that  I  am  to 
to  leave  you  here/  He  said,  'You  will  do  nothing  of  the  kind. 
Come  and  sit  with  me.  Never  mind  what  you  have  been  instructed 
to  do/ 

"I  walked  into  the  box  with  him.  Suddenly  he  turned  to  me 
and  said,  'What  is  that  gold  chair  doing  there  ?'  I  told  him  it  was 
supposed  to  be  the  royal  chair  his  grandfather  had  sat  in.  He 
asked  to  have  it  taken  out  as  he  preferred  to  sit  in  one  of  our 
regular  chairs.  After  the  porter  had  removed  the  gold  chair,  we 
sat  down  together.  The  time  alloted  on  the  royal  itinerary  for 
the  entertainment  was  to  be  just  fifteen  minutes.  We  had  a 
funny  dog  comedy  called  'The  Yellow  Dog  Catcher/  All  the 
parts  were  played  by  dogs ;  there  must  have  been  fifty  of  them. 
The  Prince  laughed  until  his  sides  ached  and  wanted  to  know  the 
breeds  of  the  different  dogs.  After  looking  at  some  of  the  mon- 
grels I  admitted  it  was  beyond  me. 

"When  his  fifteen  minutes  were  over,  I  told  him  his  time  was 
up.  He  said,  'Now  don't  drive  me  out.  Isn't  it  the  oddest  things 
that  they  pick  out  for  you  to  do  on  a  visit  like  this?  I  have 
visited  every  dead  man's  grave  in  New  York  and  placed  flowers 
on  them.  This  is  the  first  bit  of  relief  I  have  had  since  I  arrived. 
Now  let  me  stay/  He  stayed  about  an  hour,  and  impressed  me  as 
being  just  as  human  as  any  ordinary  boy  that  came  from  one  of 
our  American  families/' 


i 


REEL  SIX 
OVER  THE  HILL 

ASKED  W.  F.  about  the  authors  he  had  dealt  with  in  those 
~  early  days,  but  he  couldn't  remember  that  he  had  ever  met  one ; 
he  rarely  met  them  at  any  time.  The  purchases  were  made 
through  agents.  For  "Life's  Shop  Window"  $100  was  paid, 
Later  on  prices  rose.  After  some  effort  W.  F.  remembered  an 
author—  'Oh,  yes,  I  met  Zane  Grey.  We  bought  half  a  dozen 
of  his  stories.  I  don't  remember  that  he  made  any  impression 
on  me.  He  seemed  to  be  a  nice  sort  of  a  man," 

You  can  see  how  little  the  author  was  needed  by  one  curious 
tale  which  W.  R  tells  me.  "Some  other  film  concern  made  a 
motion  picture,  using  a  musical  comedy  star  by  the  name  of 
Josie  Collins.  When  the  picture  was  completed,  it  was  terrible, 
and  there  was  no  possible  market  for  it.  It  so  happened  that 
just  at  this  time  Fox  Film  was  behind  on  its  schedule  and  in 
great  need  of  a  picture,  Here  was  a  chance  to  buy  one  at  a 
bargain,  so  they  bought  it  and  cut  it  to  pieces,  and  reconstructed 
it,  making  an  entirely  different  story  without  an  additional  scene 
being  shot.  The  aunts  became  grandmothers,  the  grandmothers 
became  friends,  and  if  anything  was  missing,  we  filled  in  the 
gaps  with  titles.  It  was  previewed,  and  the  trade  papers  all 
agreed  that  it  was  a  fine  picture.  It  was  a  success." 

I  asked  about  the  movie  stars  and  how  they  were  made, 
which  brought  a  very  interesting  story  to  mind: 

"Before  making  'A  Fool  There  Was/  I  consulted  Robert 
Hilliard,  who  had  produced  it  on  the  stage  and  played  the  leading 
role  for  years.  He  said,  In  my  experience,  I  have  had  to  change 
my  leading  lady  six  times.  As  soon  as  one  scored  a  tremendous 
hi}:  in  the  part,  she  believed  herself  to  be  a  Sarah  Bemhardt  and 
became  unmanageable,  and  I  had  to  let  her  go.  My  advice  wotdd 
be  to  put  the  girl  you  choose  tinder  contract,  as  the  part  will 

56 


OVER  THE  HILL  57 

make  her.'  We  made  a  test  of  a  girl  called  Theodosia  Goodman, 
who  had  no  theatrical  experience,  and  decided  she  would  do. 
She  was  the  daughter  of  a  tailor  in  Cincinnati.  Miss  Goodman 
gave  a  very  remarkable  performance  in  this  picture;  and  then 
came  our  problem.  If  we  were  going  to  continue  her  services, 
the  name  didn't  have  quite  the  theatrical  feeling,  and  we  must 
find  a  stage  name  for  her. 

"One  day  it  was  conceived  in  our  publicity  department  that 
we  had  had  every  type  of  woman  on  the  screen  except  an 
Arabian;  our  publicity  director  felt  that  the  public  would  like 
an  Arabian.  He  conceived  the  story  that  this  Miss  Goodman 
was  born  in  Arabia — her  father  was  an  Arab  and  her  mother 
a  French  woman  who  had  played  the  theatres  in  Paris.  So  we 
took  'Arab/  and  spelling  it  backwards,  made  it  cBara/  and 
shortened  the  first  name  Theodosia'  to  Theda*  and  thus  the 
name  Theda  Bara/  Then  the  director  said,  'Now  let's  not 
settle  on  this  until  we  see  if  it  will  go  over.  Let  me  invite  the 
newspapers  to  an  interview  and  see  if  they  will  swallow  this/ 

"He  dressed  her  in  the  regular  Arabian  costume,  and  sur- 
rounded her  with  the  proper  atmosphere,  and  then  the  newspaper 
boys  all  came  in.  He  said,  1  want  you  to  meet  Miss  Bara/  and 
gave  them  her  history.  He  said  she  didn't  speak  a  word  of 
English.  The  newspaper  men  left  that  day  and  said  that  the 
Fox  Film  Corporation  had  discovered  the  greatest  living  actress 
in  the  world.  At  first  when  we  would  want  to  attract  the  atten- 
tion of  Miss  Goodman,  we  would  call  her  'Miss  Bara/  and  she 
would  not  pay  any  attention.  But  after  a  short  time  she  became 
used  to  it,  and  took  to  the  name  perfectly,  and  she  still  retains 
it.  Miss  Bara  got  $75  a  week  for  her  first  picture,  and  when  her 
contract  expired,  we  were  paying  her  $4,000  a  week." 

And  here  is  a  story  of  genius  and  temperament.  There  was 
a  Broadway  favorite  by  the  name  of  Valeska  Suratt.  She  had 
the  reputation  that  whenever  she  got  angry,  she  walked  out  and 
wouldn't  appear  at  the  studio  to  finish  her  picture;  so  W.  R, 
as  a  precaution,  took  the  last  part  of  the  picture  first.  There 
was  a  scene  in  a  gambling  house,  and  then  a  scene  in  which  the 
leading  lady  fell  downstairs.  Next  she  was  required  to  go  up 
to  Sing  Sing  and  there  encounter  a  prisoner  who  had  once 
stabbed  her.  (They  lived  a  varied  and  exciting  career,  the  movie 


58        UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

stars  of  that  early  decade.)  Miss  Suratt  was  supposed  to  be 
happy  at  the  "idea  that  the  prisoner  in  Sing  Sing  prison  was 
chopping  stones  into  small  pieces.  She  was  supposed  to  sneer 
at  him,  but  she  said  to  the  director,  "I  can  do  anything  but  sneer 
at  a  prisoner.  I  will  laugh  at  him,  but  I  will  not  sneer."  There 
was  an  argument,  and  in  the  end  Miss  Suratt  said  that  she  would 
go  home  from  Sing  Sing,  and  home  she  went. 

They  heard  no  more  from  her,  so  W.  R  decided  that  they 
would  put  out  the  picture  as  it  was,  and  it  was  so  announced. 
Then  Miss  Suratt  came  to  his  office. 

"What  is  this  rubbish  about  this  picture  being  released?" 

W.  F.  assured  her  that  it  was  a  very  good  picture  indeed. 

"But  there  is  no  ending  to  the  picture !" 

"Oh,  yes,"  said  W.  F.,  "don't  you  remember  where  you  rolled 
down  the  flight  of  stairs  from  the  gambling  house?  The  camera 
photographed  you  as  you  lay  on  the  ground,  and  we  have  now 
put  in  the  title,  'And  poor  Suratt  died  from  this  fall/  " 

Then  W.  F.  told  her  that  the  director  had  written  in  some 
more  scenes,  The  next  scene  showed  a  hearse  in  front  of  an 
old  house.  There  were  four  dirty  bums  carrying  a  coffin,  and 
the  hearse  proceeded  down  Broadway  with  the  director  running 
ahead  with  a  megaphone  yelling,  "In  this  hearse  lies  Miss  Suratt." 
He  went  on  to  describe  a  scene  in  the  cemetery,  whereupon  the 
actress  burst  out  laughing  and  gave  up.  She  came  back,  and 
from  that  time  on  never  failed  to  appear  on  time  at  the  studio. 

In  the  early  days  the  studio  was  out  on  Staten  Island,  and 
the  "rushes"  were  brought  in  every  day.  Later  the  studio  was 
moved  into  New  York,  and  in  1916  the  production  part  of  the 
enterprise  was  moved  to  Hollywood.  On  W.  F.'s  first  visit  to 
the  studio  at  the  coast,  he  noticed  a  man  leaning  up  against  a 
lamp  post  in  front  of  the  door,  wearing  a  very  loud  cowboy 
costume. 

He  says:  "Every  morning  for  a  week  this  same  figure  was 
waiting,  always  in  a  different  costume,  each  one  louder  than  the 
last,  until  my  curiosity  was  aroused.  One  day  he  approached 
me  and  said:  'My  name  is  Tom  Mix.  I  made  tip  my  mind  I 
wouldn't  work  for  any  other  company  until  I  saw  you,  Mr,  Fox/ 

"He  was  a  very  picturesque  figure  and  I  interviewed  him  and 
decided  to  engage  him.  When  the  subject  of  salary  was  broached, 


OVER  THE  HILL  59 

he  said  that  the  thing  he  was  interested  in  was  the  provision  for 
the  care  and  feeding  of  his  horses.  We  agreed  on  $350  a  week, 
including  feed  and  stables  for  his  horses.  When  his  last  con- 
tract expired,  we  were  paying  him  $7,500  a  week.  His  ftrst 
pictures  were  two-reelers  and  the  audience  liked  them.  And 
though  Tom  became  the  hero  to  the  youth  of  the  nation,  the 
interesting  thing  about  him  is  that  he  never  changed.  He  was 
with  our  company  for  ten  years  or  more,  and  to  me  he  waS*«*> 
different  when  he  got  $7,500  a  week  than  when  he  was  getting 
$350." 

I  think  the  production  of  which  W.  F.  is  proudest  is  the 
picture  called  "Over  the  Hill,"  produced  about  1920.  This  pic- 
ture had  no  stars.  It  cost  $100,000  to  make,  and  netted  over 
$3,000,000 — which  is  very  high  praise  for  a  picture.  The  story- 
was  W.  F.'s  own  idea,  and  started  when  he  heard  a  young  man 
recite  Will  Carleton's  poem  "Over  the  Hill  to  the  Poor  House." 
The  poem  made  a  sensation,  and  W.  F.  was  led  to  read  this 
volume.  He  was  always  on  the  lookout  for  plots,  and  this 
poem  brought  to  mind  all  the  old  people  left  in  institutions 
through  the  neglect  of  thoughtless  and  selfish  children. 

A  short  time  after  Mrs.  Fox  asked  him  to  do  her  a  favor. 
An  old  man  had  appealed  to  her  to  get  him  into  a  home./  He 
was  seventy-five  years  old,  in  broken  health  and  great  need  and 
without  a  friend  or  relative  in  the  world.  W.  F.  went  to  see  Jacob 
Schiff  about  it,  and  told  him  the  sad  story.  A  few  days  later 
Schiff  sent  for  W.  F.  and,  to  the  latter's  great  embarrassment, 
reported  the  result  of  an  investigation:  the  old  man  had  six 
children,  several  of  them  well-to-do.  W.  F.  brought  the  report 
back  to  his  wife,  and  naturally  was  much  annoyed. 

A  month  passed,  and  Mrs.  Fox  told  her  husband  the  sequel 
to  the  story.  She  had  written  to  each  of  those  six  sons  and 
daughters,  inviting  them  to  her  home  on  a  certain  evening.  They 
all  came.  There  were  six  brothers  and  sisters  meeting  one 
another  after  long  separation,  and  naturally  they  wondered  what 
it  was  about.  Said  Mrs.  Fox: 

"I  am  confronted  with  a  grave  problem  concerning  a  worthy 
old  man  seventy-five  years  of  age,  who  appealed  to  me  for  help 
and  begged  that  I  provide  a  home  for  him,  as  he  hadn't  a  soul 
to  turn  to.  In  my  efforts  to  have  him  admitted  to  a  home,  I 


60       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

find  he  has  four  sons  and  two  daughters/'  At  this  point  one 
of  the  girls  was  crying  with  embarrassment  and  said  she  knew 
Mrs.  Fox  was  referring  to  their  father.  This  daughter  had 
lost  her  husband  and  the  others  agreed  to  contribute  money  so 
that  the  old  man  could  live  with  her.  They  all  agreed  to  send 
their  remittances  to  Mrs.  Fox,  so  that  she  could  be  sure  the  plan 
wo^ld  be  carried  out. 

X^SS^he  story  started  in  the  mind  of  W.  F.  He  worked  it  out 
himself.  He  says: 

"We  used  no  script  for  this  picture.  The  director  came  to 
0ie  every  morning  and  I  recited  the  scenes  that  he  would  pho- 
tograph that  day.  Many  times  while  the  story  was  in  progress, 
fee  insisted  that  the  material  he  had  finished  could  not  possibly 
snake  a  motion  picture." 

When  it  was  finished,  it  was  very  sad  and  sentimental  It 
was  in  ten  reels,  and  nobody  liked  it  as  it  "preached  a  sermon." 
W.  F.  determined  at  least  to  give  it  a  trial.  It  so  happened  that* 
lie  had  a  lease  on  the  Astor  Theatre  in  New  York ;  the  lease  was 
lo  expire  in  five  days,  and  the  picture  that  was  showing  there 
was  not  very  good.  W.  F.  decided  that  since  he  had  to  pay  for 
the  theatre  anyway,  he  would  put  in  "Over  the  Hill"  for  that 
live  days  and  see  what  happened.  He  continues  : 

'The  next  night  this  picture  went  in,  and  we  gave  free  passes 
to  fill  the  theatre.  I  remember  standing  in  the  lobby  after  the 
show,  asking  this  one  and  that  one  how  they  liked  the  picture. 
One  of  the  last  persons  to  come  out  was  a  man  whom  I  wouldn't 
want  to  meet  on  a  dark  night  alone;  he  had  the  hardest  face 
of  any  man  I  had  ever  seen.  He  was  smoking  his  pipe,  and 
I  asked  him  for  a  light.  While  we  smoked,  I  asked  him  how 
tie  liked  the  picture.  He  spoke  with  a  Scotch  accent  and  said : 
*I  liked  it  very  much,  lad,  but  it's  had  a  terrible  effect  on  me* 
You  see,  I'm  a  seaman — I  am  only  fifty,  but  I  have  been  out  to 
sea  forty  out  of  those  fifty  years.  I  ran  away  from  home  when 
I  was  a  lad  and  never  returned  or  wrote  me  mither  a  line.  Ah, 
but  tomorrow  I  buy  me  a  ticket  to  go  home  to  Scotland — I  am 
going  to  see  me  mither  again/  I  suggested  he  had  better  cable 
first,  because  he  had  been  away  a  long  time  and  his  mother  might 
be  dead.  He  said,  'I  will  go  home  to  Scotland,  and  if  she  be  dead, 
I  am  going  to  kneel  at  her  grave  and  ask  her  to  forgive  me/  " 


OVER  THE  HILL  61 

Says  W.  F.  :  "When  I  realized  that  this  man  was  so  affected 
that  he  would  travel  3,500  miles  to  kneel  at  his  mother's  grave,  I 
knew  I  had  created  a  story  that  would  do  much  good.  Men 
and  women  by  the  millions  poured  into  the  theatres  all  over  the 
world  and  came  out  thinking  about  their  old  parents  and  whether 
they  were  doing  their  duty.  My  publicity  people  communicated 
with  homes  for  the  aged  to  find  out  whether  there  were  any  old 
people  being  reclaimed  from  these  homes  ;  they  found  that  in  the 
eighteen  months  following  the  production  of  "Over  the  Hill," 
more  than  5,000  old  men  and  women  had  been  taken  back  to  live 
with  their  children  !  When  the  picture  was  sent  to  England,  the 
government  revised  its  regulations,  and  for  the  first  time  permitted 
a  moving  picture  to  be  shown  in  the  prisons." 

Such  is  the  power  of  the  "movies,"  and  that  of  the  "talkies" 
is  even  greater.  W.  F.  had  a  full  realization  of  this  power  ;  and 
in  common  with  every  other  producer,  he  used  it  to  uphold  the 
established  social  order.  The  "talkies"  will  tell  all  children  to 
be  kind  to  their  parents,  and  all  parents  to  be  kind  to  their  chil- 
dren; but  they  will  never  tell  anyone  that  there  is  anything 
fundamentally  wrong  with  our  social  system. 

I  shall  have  more  to  say  about  this  later.  For  the  moment 
we  have  come  to  the  war  time  and  W.  F/s  attitude  to  that  He 
tells: 

"I  left  instructions  here  in  California  that  we  must  do  all 
things  that  would  help  our  cause,  regardless  of  profit  and  gain; 
that  sequences  should  be  written  into  our  pictures  that  would 
arouse  patriotism  .  .  .  We  sold  Liberty  bonds  from  the  stage 
of  every  theatre  we  had,  many  times  much  to  the  annoyance 
of  our  patrons,  who  came  there  to  be  entertained,  and  not  to  be 
reminded  that  there  was  a  war.  They  came  to  forget  there 
was  a  war,  which  we  never  allowed  them  to  do." 

of  his  time  to  the  raising1  of 


*E^4jQuJ5§funds.  He  was  "captain^  of  several  teams  wnicli 
raised  rnilHon^ftrd  would  have  come  out  ahead  of  all  the  other 
teams  with  their  millionaire  captains  —  except  that  courtesy 
required  him  to  permit  John  D.  Rockefeller,  Jr/s  team  to  come 
out  No.  1.  There  is  an  interesting  story  connected  with  this, 
which  I  shall  tell  later,  when  we  find  W.  F.  having  business  deal- 
ings with  young  Rockefeller,  and  not  getting  a  return  of  his 


62       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

courtesy.  Also  there  was  a  curious  experience  with  Henry 
Ford,  which  I  shall  save  until  we  come  to  the  Henry  Ford  part 
of  our  story.  . 

All  through  the  war  the  Fox  Film  Corporation  prospered ; 
it  prospered  even  in  the  panic  year  of  1920,  It  broke  all  records 
in  that  year,  and  never  Jb^d  a  loss  so  long  as  its  founder  was  m 
Jgarge.  In' 1525  it  became, a  public  corporation,  a0d  then  it  pur- 
„  chained  tfie  West  Coast  chain  of  theatres.  Also  the  Fox  Theatres 
CaEBofatlon  War  ;esfiT3BsEe#rtc>  take  over  all  the  theatres  in 
which*  WllKara  Fox;  was- interested*  .Ultimately  he  had  800  as 
an  outlet  for  "his  productions,  and  his  profits  were  growing  at  a 
rate  which  astounded  Wall  Street. 

The  radio  had  come  in  1921,  and  had  brought  sharp  compe- 
tition to  the  moving  picture  business.  W.  F.  first  noticed  it  on 
rainy  nights.  "Prior  to  this,  on  a  rainy  night  our  business  would 
be  larger  than  it  would  be  on  a  clear  night  When  the  radio 
came  in,  I  made  a  careful  observation  and  found  that  cm  rainy 
nights  we  were  doing  little  or  no  business/'  So  he  began  to 
watch  the  experiments  being  tried  with  talking  pictures^  The 
first  efforts  in  America  were  made  by  means  of  a  synchronization 
of  a  moving  picture  film  with  a  phonograph  disc.  The  film  was 
run  through  a  projection  machine,  and  the  disc  was  played  by  a 
phonograph,  and  the  enlarged  sound  thrown  into  the  theatre. 
But  W.  F.  insisted  from  the  beginning  that  this  method  was  hope- 
less; real  success  would  begin  only  when  the  sound  track  was 
put  on  the  film  with  the  pictures.  He  tells  the  basis  of  this 
conviction : 

"I  went  to  the  Warner  Theatre  one  day,  to  hear  a  man  sing  the 
introductory  number  of  "Pagliacci."  Of  course,  I  went  expect- 
ing to  be  thrilled.  This  was  the  first  person  from  grand  opera 
who  consented  to  sing  for  talkies.  The  picture  started,  and  he 
was  making  all  the  gestures  he  used  on  the  stage,  and  the  sound 
I  heard  was  a  banjo  playing,  accompanied  by  a  colored  man 
singing  'I  Wish  I  Was  in  Dixie.'  Of  course  the  operator  had 
put  on  the  wrong  record  I  And  later  they  ran  into  this  difficulty — 
they  had  the  problem  of  shipping  the  reels  to  the  exhibitor,  and 
if  one  record  was  broken,  no  show  could  be  given.  When  film 
gets  old  you  must  cut  out  the  brittle  part;  and  of  course  when 
this  was  done,  the  record  and  the  film  did  not  synchronize.  At 


OVER  THE  HILL  63 

one  time  I  wrote  a  paper  with  101  definite  reasons  why  it  was 
not  possible  to  have  the  industry  adopt  records  and  film  and 
make  them  synchronize/' 

W.  F.  stood  out  for  "sound  on  film/'  and  tells  the  very  inter- 
esting story  of  how  he  got  it: 

"In  the  winter  of  1925  I  was  in  California,  and  in  the  spring 
I  returned  to  New  York.  The  first  day  I  arrived  at  my  office 
I  was  greeted  by  my  brother-in-law,  Jack  Leo,  who  said  he  would 
like  to  show  me  something  in  the  projection  room.  I  went  to 
the  room,  and  to  my  amazement,  in  this  projection  room  that 
I  had  visited  for  many  years  and  that  had  always  been  silent, 
the  machine  went  into  operation,  and  there  was  a  little  canary 
bird  in  a  cage  and  it  was  singing.  It  sang  beautifully  from  the 
lowest  to  the  highest  note  it  was  possible  to  sing.  It  sang  for 
several  minutes,  and  then  following  that  came  a  Chinaman  who 
had  a  ukelele  and  he  sang  an  English  song.  He  sang  terribly 
and  played  none  too  well,  but  to  me  it  was  a  marvel.  At  the 
conclusion  of  that  the  lights  went  up,  and  they  said,  "What  do 
you  think  of  it?'  I  said  it  was  marvelous.  Leo  said,  'It  is  all 
right  if  you  think  it  is  marvelous,  because  I  have  incurred  an 
expense  of  about  $12,000  without  your  consent  while  you  were 
away.  Upstairs  I  have  built  a  temporary  sound-proof  stage 
and  we  have  been  photographing  sound-proof  pictures.  If  you 
didn't  like  it,  I  was  prepared  to  pay  the  $12,000  out  of  my  own 
pocket.'  I  said,  'Like  it?  This  is  revolutionary!'  This  bird 
sang  just  as  though  it  were  in  a  tree,  and  I  found  that  the  sound 
had  been  recorded  on  film  and  that  it  was  reproduced  by  light 
from  the  film  to  the  screen.  All  mechanical  sound  was  eliminated. 

"I  went  up  on  this  temporary  stage  floor  and  saw  the  tempo- 
rary sound-proof  room,  where  everything  had  to  be  done.  I 
said  that  couldn't  be  right.  If  the  photographing  had  to  be  done 
in  a  sound-proof  room,  then  you  are  going  to  rob  this  camera 
of  seeing  nature.  They  said  there  was  only  one  way  to  record 
sound,  and  that  was  in  sound-proof  rooms.  I  said,  'That  can't 
ke  so — yOU  must  be  in  error/  But  they  were  sure  of  their 
position,  and  it  was  necessary  to  build  a  perfected  sound-proof 
room.  We  let  a  contract  to  build  our  first  sound-proof  stages 
on  54th  Street  and  Tenth  Avenue.  The  contractors  said  it  would 

take  four  months  to  build  this  studio. 
6 


64       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"I  called  for  the  inventor,  Mr.  Case,  and  said,  'I  am  going 
to  give  you  a  million  dollars,  and  you  can  spend  this  million 
dollars  in  the  next  four  months,  anyway  you  like,  in  experi- 
menting how  to  make  this  camera  photograph  on  the  outside 
without  a  sound-proof  room/  Shortly  thereafter  they  brought 
the  various  things  they  had  photographed  outside.  One  was  a 
rooster  crowing  and  it  sounded  exactly  like  a  pig  squealing. 
Another  was  a  dog  barking  which  sounded  like  a  cow.  They 
recognized  that  they  didn't  have  it,  because  of  the  confusion  of 
sound.  About  thirty  or  forty  days  later  they  said,  'Here,  this 
time  we  have  it'  On  the  screen  there  came  rushing  before  me 
a  train  photographed  on  the  Jersey  Central  tracks,  and  I  heard 
the  whistles  blowing  and  the  wheels  turning  just  as  though  the 
train  were  with  me  in  that  room.  I  said,  'Now  you  have  it/  " 

We  shall  deal  later  on  with  the  complicated  question  of  the 
patent  rights  to  "sound  on  film,"  and  the  enormous  financial  inter- 
ests involved.  For  the  moment  I  am  dealing  with  the  cultural 
aspects  of  W.  F/s  activities,  and  the  benefits  which  the  public 
got  from  his  work.  One  of  these  was  the  Fox  Movietone  News. 
For  the  first  time  it  was  possible  for  the  public  not  merely  to 
see  the  crowned  heads  and  generals  of  Europe  marching  in 
parades  and  reviewing  their  soldiers,  but  to  hear  the  cheers  of 
the  crowds  and  the  playing  of  the  bands.  The  dwellers  in  remote 
cattle  and  lumber  towns  of  the  West  could  now  leap  magically 
over  the  world,  and  they  came  every  week  for  this  thrilling 
ten  or  fifteen  minutes.  Sound  newsreels  became  the  rage. 

Also  there  was  W.  F/s  dream  of  educational,  religious,  and 
scientific  pictures.  He  had  been  making  silent  pictures  for 
schools,  and  was  proud  of  them.  The  American  Telephone  and 
Telegraph  Company  claimed  all  the  patent  rights  for  sound  pic- 
tures, and  W.  F.  made  a  tie-up  with  them,  and  took  Walter  S. 
Gifford,  president  of  the  Telephone  Company,  to  see  some  of 
his  pictures  in  a  school  somewhere  on  the  East  Side  of  New  York. 

"We  showed  some  of  our  silent  educational  pictures  we  had 
made  to  a  classroom  of  boys  and  girls,  and  Mr.  Gifford  came 
and  brought  his  little  son  with  him.  Of  course,  Gifford  was 
delighted  with  it  and  thought  it  was  wonderful.  I  said,  If  you 
think  this  is  wonderful,  wait  until  you  see  them  when  we  make 
them  in  sound/  and  he  concurred/'  We  shall  hear  later  of  a 


OVER  THE  HILL  65 

dispute  with  the  Telephone  Company  over  this  issue,  and  the 
rights  to  the  making  of  newsreels  and  educational  pictures. 
There  were  mountains  of  treasure  dumped  out  for  those  to  seize 
who  had  the  power,  and  W.  F.  made  the  mistake  of  trying  to  take 
his  share. 

He  had  been  caught  napping  by  the  radio,  which  had  taken 
away  his  audiences  on  rainy  nights,  and  in  1928  he  saw  television 
on  the  way,  and  didn't  want  to  be  caught  napping  again.  "I 
reached  a  conclusion  that  the  one  thing  that  would  make  it  pos- 
sible to  compete  with  television  was  to  use  a  screen  ten  times 
larger  than  the  present  screen,  a  camera  whose  eye  could  see 
ten  times  as  much  as  at  present.  For  example,  Roxy's  picture 
screen  is  eighteen  feet  wide,  and  the  screen  I  proposed  was, 
about  ninety  feet.  I  believed  this  'Grandeur*  would  come  closer 
to  the  third  dimension  we  hear  scientists  talking  about/' 

W.  F.  proceeded  to  form  the  Fox  Grandeur  Corporation, 
and  ordered  the  making  of  a  'Grandeur*  projecting  machine  at  his 
own  expense.  'This  was  an  experiment  William  Fox  was  mak- 
ing— it  was  not  an  experiment  of  the  Fox  companies,  because 
there  was  a  great  hazard  about  it,  and  I  always  took  the  hazard^ 
myself/' 

The  other  motion  picture  producers  were  greatly  disturbed  by 
the  development  of  "Fox  Grandeur/'  Zukor,  president  of  Para- 
mount, and  Sarnoff,  representing  RKO,  the  all-powerful  Radio 
Corporation  of  America,  came  to  call  on  W.  F.  "They  said  I 
was  about  to  make  a  great  mistake :  the  industry  had  just  changed 
from  silent  to  sound;  a  great  inventory  had  to  be  wiped  down, 
and  we  were  just  about  catching  our  breath,  and  here  I  was 
trying  to  upset  it  again.  I  was  calling  it  progress,  and  they  called 
it  destruction.  They  said  that  enlarging  the  pictures  could  be 
done  at  another  time,  when  all  the  companies -would  agree  on  a 
uniform  size.  Each  company  was  claiming  they  had  a  much 
finer  development  at  that  time,  and  their  purpose  was  to  per- 
suade me  not  to  give  the  premiere  performance.  I  described  to 
them  the  necessity  of  it,  that  we  could  not  see  television  destroy 
us.  Of  course,  I  was  firm  in  my  position,  that  my  duty  was  to 
further  the  motion  picture  business — I  hoped  it  would  hurt  no 
one.  I  was  going  to  give  my  premiere,  and  if  the  public  decided 
it  was  no  good,  that  would  be  the  end  of  it.  Shortly  thereafter, 


66       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

we  gave  the  premiere  of  'Sunny  Side  Up/  and  it  was  hailed  as 
a  great  success,  I  ordered  more  pictures  made." 

So  here  again  we  see  William  Fox,  the  stubborn  and  ego- 
tistical person,  making  powerful  enemies.  We  shall  see  him 
thus  making  one  enemy  after  another ;  playing  a  lone  hand,  insist- 
ing on  having  his  own  way,  regardless  of  how  much  trouble  he 
makes  for  his  competitors,  and  for  the  great  monopolies  of 
manufacturing  and  finance.  We  shall  see  exactly  how  they 
stopped  him.  For  the  moment  suffice  it  to  say  that  with  his 
"ousting,"  the  "Grandeur"  movement  died,  and  has  never  been 
heard  of  since.  A  second  picture,  "The  Big  Trail,"  which  he 
had  in  production,  was  the  last  the  public  ever  saw. 

And  the  same  thing  has  happened  to  the  elaborate  schemes 
for  the  making  of  sound  pictures  for  churches,  schools,  scientific 
institutions  and  homes.  W.  F.  had  this  all  figured  out,  and  had 
begun  production.  He  had  plans  for  the  making  of  school  and 
church  equipment,  at  very  low  prices.  He  is  still  cherishing 
this  dream. 


REEL  SEVEN 
THE  MIDAS  TOUCH 

WE  come  now  to  the  point  where  we  must  understand  the 
finances  of  the  Fox  companies.  I  assume  that  my  readers 
will  be  of  two  classes,  a  small  number  who  are  familiar  with  high 
finance,  and  a  large  number  who  are  not.  I  write  for  the  latter 
group,  and  the  few  more  fortunate  ones  will  have  to  endure  a 
little  boredom. 

The  Box  Office  Attractions  Film  Rental  Company,  started  in 
1912,  was  continually  expanding,  and  in  1915  its  assets  were  taken 
over  by  a  new  concern,  the  Fox  Film  Corporation.  This  was  a 
closed  corporation;  its  shares  were  never  offered  for  sale.  Wil- 
liam Fox  took  one-half  the  common  stock,  and  his  associates 
in  New  Jersey  took  the  other  half.  There  was  half  a  million 
dollars  in  preferred  stock,  which  was  paid  off  in  a  couple  of 
years,  so  we  don't  have  to  bother  with  it.  The  point  is  that  the 
men  from  New  Jersey  who  invested  $400,000  in  the  Fox  Film 
Corporation  got  their  money  back  in  two  years,  and  in  the  course 
of  the  next  fourteen  years  they  got  $10,000,000  in  dividends, 
and  at  the  end  of  that  period,  their  stock  had  a  market  value  of 
$10,000,000. 

W.  F/s  arrangement  with  these  associates  was  that  he  should 
select  four  directors  of  the  corporation  and  they  should  select 
four.  It  was  understood  that  this  arrangement  would  never  be 
changed.  Now  comes  a  curious  story: 

"Within  a  month  after  the  company  was  formed,  a  man 
appeared  in  my  office  one  day.  He  was  a  relation  of  one  of  the 
group  who  had  put  up  the  $400,000,  and  he  had  in  his  hand  a 
certificate  of  stock  for  ten  shares.  He  wanted  to  know  how 
much  I  would  give  him  for  it.  I  asked  him  where  he  had  gotten 
it,  and  he  said  Mr.  Kuser  had  given  it  to  him.  He  said  Mr. 
Kuser  had  allowed  him  to  buy  some  of  the  preferred  stock  and 

67 


68       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

had  given  him  these  shares.  I  said,  'You  ought  not  to  offer  that 
to  me.  These  ten  shares  would  give  me  a  majority/  He  said  he 
knew  it  and  that  was  what  he  wanted.  He  said  that  he  had  had 
a  row  with  them  and  he  wanted  to  get  even.  He  said,  'This  will 
upset  the  thing  Kuser  has  so  carefully  planned.  If  you  don't  buy 
them,  I  am  going  to  give  them  to  you/  I  didn't  want  him  to  give 
them  to  me,  so  I  asked  him  if  $1,000  would  do.  I  gave  him  the 
thousand  dollars,  took  the  certificate,  and  put  it  in  my  vault. 
From  1915  to  1925,  no  man  in  the  Jersey  contingent  ever  knew 
that  I  had  the  majority  in  that  company.  For  the  ten  years  th?' 
I  had  the  majority  of  stock  in  my  vault,  at  no  time  did  I  permit  a 
single  resolution  to  be  passed  by  the  board  of  directors  that  was 
not  unanimous." 

In  1925,  the  "Jersey  contingent"  suggested  that  they  would 
like  to  have  the  company  listed,  so  that  they  could  sell  the  shares 
on  the  market  if  they  wanted  to ;  therefore,  by  agreement,  it  was 
recapitalized  for  a  million  shares  of  stock,  of  which  only  half  a 
million  were  issued  at  the  beginning.  The  administration  of 
W,  F.  having  been  satisfactory,  the  associates  were  willing  that 
he  should  keep  control,  and  the  million  shares  were  divided  into 
two  groups ;  900,000  A  shares  which  had  no  votes,  and  100,000 
B  shares  which  carried  the  voting  control  of  the  company. 

This  is  a  new  wrinkle  in  high  finance  which  has  come  into 
fashion  in  the  last  ten  years.  It  seems  to  me  to  be  wholly  against 
public  policy,  and  should  be  forbidden  by  law ;  but  many  of  our 
biggest  corporations  have  adopted  it,  and  of  course  W.  F.  had  a 
right  to  join  the  procession.  It  is  amusing  to  note  that  his 
enemies  were  righteously  indignant  at  the  arrangement,  and  when 
they  finally  succeeded  in  ousting  him  and  taking  over  his  voting 
shares,  they  put  them  into  a  corporation  which  was  controlled  by 
three  shares  of  stock ! 

The  device  of  voting  shares  has  one  purpose — to  deprive  the 
people  who  put  up  the  money  of  any  say  as  to  how  their  money 
shall  be  handled.  It  means  the  removal  from  our  industrial  sys- 
tem of  every  trace  of  democracy  and  self-government.  It  makes 
the  corporation  an  absolute  monarchy;  and  you  will  find  what 
you  may  have  noticed  through  all  history,  that  absolutism  may 
work  not  so  badly  when  you  have  a  benevolent  monarch,  but 
trouble  begins  when  you  get  a  bad  one.  So  long  as  William  Fox 


THE  MIDAS  TOUCH  69 

ran  the  Fox  enterprises,  the  stockholders  made  money;  but  when 
his  enemies  took  control,  the  stockholders  lost  everything.  In 
neither  case  had  they  done  anything  to  deserve  what  they  got. 

At  the  outset  there  were  235,000  shares  of  A  stock  issued  to 
the  old  stockholders,  and  165,000  were  sold  to  the  bankers  at 
$40  a  share,  netting  the  company  $6,600,000.  The  bankers  sold 
these  shares  to  the  public  for  $43.  Later  on,  to  make  possible  the 
purchase  of  the  West  Coast  Theatres,  the  bankers  sold  to  the 
public  new  shares,  until  the  total  issue  was  920,660,  All  shares 
paid  a  dividend  of  $4  a  share  per  year  as  long  as  W.  F.  was  in 
charge.  I  will  give  here  a  table  showing  the  gross  rentals  and 
net  earnings  of  the  corporation : 

Year  Gross  Rentals        Net  Earnings 

1914  $  272,401    $ 

1915 3,208,201  523,003 

1916  4,244,658  365,000 

1917 7,118,172  593,000 

1918  7,300,301  270,000 

1919  ,.  9,380,883     

1920  12,605,725    1,413,542 

1921 13,715,000    1,605,889 

1922  , 12,327,957    2,660,158 

1923  11,242,629    1,808,166 

1924  9,926,025    2,009,043 

1925  11,750,515  2,606,271 

1926 14,274,234  3,030,926 

1927  17,012,875  3,120,557 

1928  22,626,747  5,957,218 

1929  30,803,974  '9,469,051 

Up  to  1926,  Fox  Film  owned  only  two  theatres.  That  year 
it  bought  a  third  interest  in  West  Coast,  and  the  next  year  it 
bought  the  balance  of  this  concern.  At  this  time,  the  West  Coast 
owned  something  over  150  theatres.  Under  the  management  of 
W.  F.y  it  increased  the  number  to  over  500.  It  obtained  another 
hundred  in  purchasing  a  company  called  the  Midwest.  It  is  clear 
enough  that  when  you  are  turning  out  a  feature  picture  every 
week,  it  is  to  your  advantage  to  own  theatres  in  every  city  and 
town  in  order  to  be  sure  of  getting  adequate  releases  for  your 
product.  It  is  what  the  Chicago  packers  tried  to  do  when  they 


70       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

started  buying  up  butcher  shops  for  the  selling  of  their  product. 
The  Government  stopped  the  packers,  but  it  permitted  the  moving 
picture  concerns  to  carry  out  this  same  program. 

The  figures  for  1929  were  prepared  and  issued  after  W.  R 
was  ousted  from  the  company,  and  it  appears  that  more  than 
$4,000,000  was  taken  from  the  1929  earnings  and  held  over  to  be 
reported  in  the  1930  earnings,  so  as  to  save  the  prestige  of  the 
new  regime.  The  real  earnings  of  Fox  Film  in  1929  were  over 
$13,500,000;  and  in  addition  there  was  a  "non-recurring"  profit 
of  $8,000,000,  to  be  explained  later. 

Fox  Theatres  Corporation  was  formed  to  take  over  the  many 
theatres  in  which  W.  F.  had  investments  along  with  various 
associates.  It  became  a  public  corporation  with  3,900,000  shares 
of  Class  A  stock,  non-voting,  and  100,000  shares  of  Class  B  stock, 
voting.  W.  F.  took  the  100,000  shares  of  voting  stock  and  also 
300,000  shares  of  non-voting  stock — this  in  return  for  his  theatres 
at  their  value  of  $8,800,000,  certified  to  by  accountants  on  the 
basis  of  their  earnings.  The  price  of  the  stock  was  $22  per  share, 
and  the  bankers  took  a  half  million  shares  at  this  price  and  sold 
them  to  the  public  at  $25.  This  netted  the  company  $11,000,000 
and  made  Fox  Theatres  a  $20,000,000  corporation. 

•  Jlere  is  a  table  of  the  earnings  of  Fox  Theatres  during  the 
four  years  that  W.  F.  was  in  charge. 

1926 $454,101 

1927 823,659 

1928 1,522,079 

1929 , 2,660,261 

Get  the  picture  of  these  two  concerns.  At  the  rate  at  which 
Wall  Street  capitalizes  its  enterprises,  Fox  Film  is  worth  about 
$200,000,000,  and  Fox  Theatres  is  worth  about  $50,000,000.  In 
the  ordinary  course  of  high  finance,  each  of  these  companies 
would  have  issued  a  vast  quantity  of  bonds  and  debentures,  and 
the  money  thus  raised  would  have  gone  into  the  pockets  of  the 
promoters  and  financiers — not  to  mention  a  handsome  rake-oif 
for  the  bankers,  ten  or  fifteen  millions.  You  will  see,  when  W.  F. 
-  is  ousted,  that  very  thing  happening.  Bonds  and  stock  to  the 
amount  of  $103,0(30,000  are  issued,  and  by  various  devices  of 
refinancing  the  bankers  get  nearly  half  of  this  money.  Who  gets 


THE  MIDAS  TOUCH  7] 

the  rest  is  a  mystery  of  this  book;  all  I  can  show  you  is  that  the 
amount  disappeared  in  the  course  of  a  couple  of  years. 

The  fact  that  W.  F.  worked  day  and  night  for  his  stockholders 
and  that  he  paid  them  their  dividends  as  they  were  earned — this 
news  spread  throughout  the  United  States.  It  was  helped,  of 
course,  by  the  public  nature  of  the  Fox  business.  Everybody  saw 
the  Fox  Movietone  newsreels;  everybody  went  to  the  Fox  the- 
atres. So  when  William  Fox  wanted  to  buy  more  theatres  or 
chains  of  theatres,  and  to  make  more  pictures  and  newsreels,  he 
had  no  difficulty  in  raising  the  money.  The  public  hastened  to 
take  the  Fox  securities  whenever  they  were  put  upon  the  market. 
In  four  years  Fox  was  able  to  raise  a  total  6f  $135,000,000.  There 
was  no  preferred  stock  and  no  "stale"  stock.  The  companies  were 
owned  entirely  by  their  common  shareholders  and  were  controlled 
entirely  by  the  voting  shares  which  William  Fox  kept  in  his 
strong-box.  In  the  case  of  Fox  Theatres  there  was  only  one  cer- 
tificate for  100,000  shares  of  B  stock.  In  the  case  of  Fox  Film 
there  was  one  certificate  for  a  majority  of  the  voting  shares. 
These  two  pieces  of  paper  were  highly  precious,  being  the  key  of 
the  treasure  chest,  and  whoever  owned  them,  was  the  master  of 
more  than  a  quarter  of  a  billion  dollars.  Many  men  dreamed  of 
getting  them,  and  the  final  battle  over  their  possession  is  our 
theme. 

W.  F.  tells  how  it  feels  to  be  the  owner  of  two  such  pieces 
of  paper: 

"When  you  create  a  company  and  own  part  of  its  shares,  if 
all  shares  vote  alike,  your  responsibility  is  not  very  much.  These 
shares  have  a  right  to  elect  the  board  of  directors,  and  if  they 
haven't  exerted  their  rights,  it  is  their  own  fault.  But  when  you 
own  the  voting  shares,  exactly  the  opposite  is  the  case.  The 
stockholders  have  no  power,  they  have  no  rights — their  rights 
only  come  on  a  dishonest  act.  So  the  creator  acts  in  a  fiduciary 
capacity ;  the  whole  burden  rests  on  his  shoulders.  That  was  my 
life  during  the  time  I  owned  these  voting  shares.  I  felt  the 
responsibility  keenly,  and  at  no  time  in  the  Film  company  did  I 
ever  permit  a  resolution  to  be  passed  without  a  unanimous  vote. 
The  majority  of  the  board  would  pass  on  the  things  that  would 
be  submitted  to  it.  Ultimately  I  passed  all  the  things  I  wanted, 
but  I  did  it  by  persuasion  and  not  by  a  mere  vote. 


72       UPTON  SINCLAIR  PRESENTS  WILLfAM  FOX 

"That  is  enough  to  make  a  young  man  old,  to  control  the 
voting  shares ;  but  the  man  shoulders  a  double  burden  when  he 
foolishly  lends  his  name  to  the  corporation.  He  then  has  a 
responsibility  that  he  can  never  escape ;  his  whole  career  is  wound 
tip  in  this  enterprise.  Of  course,  if  he  knows  the  business  and 
likes  it,  he  can  enjoy  this  situation.  With  me,  it  was  a  new  adven- 
ture every  day." 

What  use  does  W.  F.  make  of  his  monarchy?  He  will  make 
his  own  statement  about  that : 

"I  was  the  president  of  the  Fox  Theatres  Corporation  and  at 
no  time  from  the  time  it  was  created  in  November,  1925,  up  to 
this  moment  did  I  ever  receive  a  penny  of  salary.  I  was  giving 
my  services  to  Fox  Theatres  without  compensation.  I  was  getting 
no  percentage  of  the  profits.  At  no  time  since  the  creation  of 
Fox  Theatres  in  1925  until  the  day  I  sold  out  did  I  ever  present 
that  company  with  a  voucher  for  any  personal  expenses  I  had 
incurred  in  its  behalf.  Sometime  in  1926  when  I  realized  the 
corporation  had  assumed  the  task  of  paying  $2,000,000  a  year  in 
dividends,  $4  a  share,  the  earnings  were  approximately  $3,000,000 
a  year,  and  I  felt  that  was  a  close  margin  between  earnings  and 
dividends.  Up  to  this  time  I  was  receiving  a  salary  of  $200,000 
a  year  from  Fox  Film  and  I  voluntarily  withdrew  my  name  from 
the  payroll.  I  had  no  agreement  under  which  I  was  to  receive 
any  percentage  of  its  profits.  I  was  paying  for  the  privilege  of 
being  president  of  these  two  companies.  I  had  spent  of  my  own 
funds  between  1926  and  the  day  I  sold  out  several  hundreds  of 
thousands  of  dollars,  for  which  I  was  never  reimbursed  and  for 
which  I  never  presented  a  voucher. 

"I  felt  that  I  was  a  most  unusual  president  of  a  corporation. 
I  was  receiving  dividends  on  the  stocks  that  I  owned  on  the  same 
basis  as  any  other  stockholder.  Every  other  stockholder  was 
receiving  his  dividends,  but  was  not  asked  to  devote  any  of  his 
time.  No  other  stockholder  was  asked  to  extend  any  part  of  his 
dividends  for  promoting  the  companies ;  no  other  stockholder  was 
asked  to  render  services  to  the  companies  without  compensation. 
Fox  was  spending  his  own  money  and  was  not  asking  for  the 
reimbursement  of  it/' 

The  story  has  now  come  to  the  beginning  of  1929.  All  the 
way  through  you  will  note  that  W.  F,  is  expanding,  taking  in  new 


THE  MtDAS  TOUCH  73 

enterprises;  always  running  risks  and  never  learning  fear.  He 
thinks  he  has  learned  how  to  make  moving  pictures  which  will 
appeal  to  the  public,  and  he  thinks  he  knows  how  to  manage  the- 
atres and  collect  the  public's  money.  He  thinks  he  knows  this 
better  than  other  men,  and  so  he  expands.  At  the  same  time, 
when  his  rivals  attempt  to  expand,  he  blocks  them  and  thwarts 
their  deals.  He  is  somewhat  naive,  in  that  he  fails  to  realize  how 
this  makes  them  hate  him.  He  forgets  their  hatred  quickly, 
because  he  is  busy  with  new  enterprises.  But  they  do  not  forget, 
and  wait  their  turn  to  pay  him  back. 

^The  greatest,  xotist€fker-h®,xo^<ie  was  that  he  sometimes  failed  to 
pay  ffie'Fankiers  the  "rake-off"  to'v^  flKShSdves 

entitled.  Fox  Theatres  issued  more  than  700,000  shares  which 
netted  the  company  an  average  of  $25  per  share ;  and  under  the 
rules  of  the  Wall  Street  game,  some  one  of  the  big  banking  houses 
should  have  underwritten  these  shares,  and  charged  about  $3 
per  share  for  the  service,  which  would  have  been  over  $2,000,000. 
For  William  Fox  to  have  deprived  the  bankers  of  this  money 
and  saved  it  for  his  stockholders — that  was  the  greatest  crime  he 
could  have  committed  in  Wall  Street,  and  proved  him  wholly 
unfitted  to  carry  on  a  big  financial  enterprise.  When  the  time 
came  that  his  enemies  were  ready  to  surround  him  and  block  him 
off,  they  did  not  have  much  trouble  in  persuading  the  other  banks 
and  investment  houses  to  keep  hands  off.  They  could  say :  "You 
know  this  man ;  he  is  an  interloper,  and  does  not  obey  the  rules ; 
he  is  setting  precedents  which  would  put  us  out  of  business.  It 
is  as  much  to  your  interest  as  to  ours  that  he  be  punished.  So 
lay  off  and  let  us  do  it." 

In  the  managing  of  theatres  W.  F.  admitted  only  one  peer  to 
himself,  and  that  was  Marcus  A.  Loew,  who  was  dead,  I 
am  sure  that  he  planned  to  get  all  the  moving  picture  theatres 
in  the  United  States  under  his  control  sooner  or  later.  He 
was  prepared  to  pay  the  price  for  them.  When  the  others  got 
into  trouble,  the  price  became  cheaper.  I  think  also  that  he 
planned  to  have  the  making  of  moving  pictures  entirely  in  his 
own  hands. 

He  had  had  the  wit  to  see  that  recording  discs  were  useless, 
and  that  the  future  lay  with  sound  on  film.  He  had  bought  the 
really  vital  patents  covering  the  photoelectric  process.  Also  he 


74       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

had  conceived  the  wide  screen  and  made  it  known  to  the  public  as 
Fox  Grandeur.  He  had  fixed  sound  newsreels  in  the  public  mind 
as  Fox  Movietone.  It  was  the  object  of  his  enterprises  to  build 
up  a  chain  of  theatres  that  would  cover  the  forty-eight  states  of 
the  Union.  Fox  Film  would  acquire  theatres  from  Maine  to 
Illinois,  and  West  Coast  would  acquire  them  from  California  to 
Illinois,  and  some  day  the  chains  would  meet.  He  had  started 
school  pictures,  church  pictures,  scientific  pictures.  Of  course 
he  considered  himself  the  man  to  run  the  industry ! 

At  the  session  I  had  with  W.  F.  and  his  wife,  there  was  an 
interesting  little  drama.  It  seems  that  for  years  she  had  been 
begging  him  to  retire ;  she  had  had  enough  of  being  married  to  a 
slave,  and  of  having  to  turn  herself  into  a  slave  in  order  to  have 
a  husband.  "All  this  fight  was  unnecessary/'  she  said ;  "he  had 
promised  me  to  retire  in  a  year,  and  that  year  was  half  up/' 

I  looked  at  W.  F.,  rather  puzzled.  I  remembered  all  the  new 
obligations  he  had  assumed  during  that  year,  a  total  of  $93,000,- 
000 ;  I  remembered  the  new  plans  he  had  told  me,  the  new  com- 
panies he  had  bought,  and  his  plans  for  amalgamation ;  the  new 
chains  of  theatres  and  their  redecoration ;  the  Grandeur  pictures ; 
the  new  and  cheaper  projection  machines  and  sound  equipment, 
that  would  put  talking  pictures  into  schools  and  churches,  into 
hospitals  and  orphan  asylums,  and  make  them  as  common  in  the 
home  as  the  radio  is  today.  "Did  you  really  mean  to  retire  in 
the  year?"  I  asked.  W.  F.  smiled  a  sly  smile  and  said,  "I  meant 
to  retire  as  soon  as  I  had  got  things  fixed  so  that  they  would  run 
themselves."  Mrs.  Fox  then  told  me  a  story  about  little  Eve  Leo 
in  the  days  before  her  marriage.  She  had  befriended  an  old  Irish 
woman,  and  this  old  woman  had  made  a  remark  which  had 
seemed  dreadfully  cynical  to  the  little  Jewish  girl:  "A  woman 
can  lay  her  head  on  the  same  pillow  with  a  man  for  fifty  years 
and  never  know  what  is  going  on  inside  his  head/' 

William  Fox  was  a  man  who  did  not  know  how  to  rest,  and 
who  was  always  undertaking  new  responsibilities  and  risks.  But 
you  will  note  that  when  he  issued  new  stock  and  sold  it  to  his 
stockholders  or  to  the  public,  he  gave  them  real  value  for  their 
money.  When  he  turned  over  his  own  theatres  to  the  public,  it 
was  at  a  proper  price,  based  on  their  earnings.  When  he  bought 
other  chains  of  theatres,  he  saw  that  he  got  full  value,  and  proved 


THE  MIDAS  TOUCH  75 

it  by  making  these  theatres  earn  dividends.    He  intended  it  to  be 
that  way  with  his  next  move. 

Marcus  A.  Loew  died,  and  left  behind  him  Loew's,  Incor- 
porated, a  holding  company  owning  some  two  hundred  theatres 
throughout  the  United  States,  also  a  prosperous  producing  con- 
cern, Metro-Goldwyn-Mayer.  The  widow  of  Loew  had  400,000 
shares  of  stock  in  the  company,  which  was  close  to  one-third,  and 
practically  carried  the  control.  The  stock  was  selling  on  the  mar- 
ket for  about  $75  a  share,  but  of  course  a  block  like  this  which 
carried  the  control  was  a  different  matter,  and  the  price  for  the 
block  was  $50,000,000.  Warner  Brothers  wanted  these  shares, 
and  Zukor  of  Paramount  also  became  a  bidder. 

W.  F.  figured  what  he  could  do  with  Metro-Goldwyn-Mayer  if 
he  got  it.  Here  were  two  rival  concerns,  Fox  and  Metro,  with 
duplicate  plants,  and  130  duplicate  marketing  agencies,  covering 
nearly  every  country  in  the  world;  through  the  elimination  of 
this  waste,  there  would  be  a  saving  of  $17,000,000  a  year;  in 
comparison  with  this,  the  price  of  the  Loew  shares  was  a  small 
matter.  W,  F.  obtained  an  option  on  the  shares  and  set  out  to 
raise  the  money. 

Get  this  layout  in  mind.  A  going  concern  is  to  be  purchased — 
in  the  year  1929  Loew's,  Inc.,  was  to  earn  a  profit  of  nearly 
$12,000,000,  and  the  $50,000,000  purchase  which  W.  F.  is  making 
will  give  him  one-third  of  the  future  earnings  of  the  company; 
this  in  addition  to  the  expected  saving  of  $17,000,000  a  year. 
W.  F.  knows  that  his  stockholders  will  welcome  this  proposition, 
and  when  he  offers  them  new  stock,  they  will  buy  it  eagerly. 

We  have  seen  W.  F.  continually  borrowing  money  from 
bankers.  He  now  wants  $50,000,000,  which  is  too  much  for 
ordinary  bank  borrowing,  or  any  form  of  amateur  financing.  It 
is  a  job  for  one  of  the  so-called  investment  banking  houses,  and 
W.  F.  has  a  standing  arrangement  with  a  prosperous  and  power- 
ful concern,  Halsey,  Stuart  &  Co.;  there  is  a  contract,  whereby 
they  agree  to  do  new  financing  for  his  companies.  They  have  sold 
to  the  public  $6,400,000  for  a  Detroit  building,  $4,750,000  for  a 
St.  Louis  building,  $4,000,000  debentures  for  a  New  England 
enterprise,  $13,000,000  debentures  for  a  chain  of  theatres  acquired 
in  New  York,  $4,000,000  for  a  bond  issue  for  studios  in  Cali- 
fornia, $1,800,000  bond  issue  for  studios  in  New  York,  and  a 


76       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

$2,500,000  debenture  bond  issue  in  connection  with  the  Roxy 
theatre;  a  total  of  approximately  $36,450,000,  for  which  they 
received  a  commission  of  from  7  to  10  per  cent,  the  total  being- 
over  $3,000,000. 

Now  W.  F.  puts  before  them  a  plan  for  the  $50,000,000  cash 
purchase  of  the  400,000  Loew  shares ;  he  shows  them  the  lay-out, 
and  they  approve  it,  and  with  their  advice  he  sets  out  to  raise 
the  money.  He  goes  to  the  American  Telephone  &  Telegraph 
Company,  the  great  $3,000,000,000  octopus  which  owns  most  of 
the  wire  communications  of  the  country,  and  also  is  manufactur- 
ing talking  picture  equipment,  and  leasing  patent  rights,  and 
therefore  doing  business  on  a  profitable  basis  with  the  Fox  com- 
panies. It  so  happens  that  the  Telephone  Company  is  in  the 
midst  of  a  protracted  quarrel  with  Warner  Brothers  over  patent 
rights  and  licenses.  The  Telephone  Company  does  not  want  its 
enemy  to  get  hold  of  those  Loew  shares  and  increase  its  power 
by  amalgamation.  In  order  to  keep  Warner  from  getting  them, 
it  agrees  to  help  Fox  get  them,  and  it  lends  him  $15,000,000  for 
one  year.  Also  it  takes  him  to  the  Chatham  &  Phoenix  Bank 
and  arranges  for  that  bank  to  lend  him  $3,000,000  more.  Halsey, 
Stuart  &  Co.  lend  him  $10,000,000  for  a  year,  and  the  Bankers' 
Securities  Company  of  Philadelphia,  of  which  W.  F,  is  a  director, 
lends  him  $10,000,000,  taking  a  part  of  the  Loew  shares  as  col- 
lateral. The  Fox  Theatres  Corporation  raises  $16,000,000  by 
selling  new  shares,  which  makes  a  total  of  $57,000,000.  That  will 
leave  a  balance  of  $7,000,000  on  hand  for  emergency. 

This-  purchase  of  the  Loew  shares  took  place  on  February  24, 
1929,  after  negotiations  lasting  about  six  months.  The  financing 
was  of  a  temporary  nature,  and  all  parties  concerned  understood 
clearly  that  the  Fox  companies  could  not  pay  this  money  out  of 
earnings,  but  must  either  sell  new  stock,  or  issue  bonds  or  deben- 
tures to  cover  it.  The  loans  for  a  year  were  to  close  the  deal, 
and  allow  time  to  plan  the  refinancing. 

A  few  days  passed,  and  then  Harry  Stuart,  who  had  advised 
and  even  urged  the  deal,  and  had  loaned  $10,000,000  to  make  it 
possible,  sent  for  W.  F.  and  said  that  he  had  thought  the  matter 
over  and  changed  his  mind  about  it.  W.  F.  tells  as  follows : 

"He  said  that  I  had  done  a  terrible  thing.  He  said,  'Here  is 
a  company  that  has  1,350,000  shares  of  stock;  you  have  400,000, 


THE  MIDAS  TOUCH  77 

which,  is  less  than  a  third.  What  is  to'  stop  them  from  going  into 
the  market  and  buying  these  other  shares?'  I  told  him  I  didn't 
think  Mrs.  Loew  would  do  that,  that  I  had  faith  in  these  people. 
I  paid  higher  than  the  market  price  for  them  because  you  could 
never  buy  this  number  of  shares  in  the  market,  and  we  didn't 
want  a  long-drawn-out  process  of  getting  these  shares.  I  said, 
'What  do  you  want  me  to  do  now  ?'  and  he  said,  'I  want  you  to 
go  right  in  the  market  and  buy  the  number  of  shares  it  will  take, 
so  you  will  have  a  majority  of  the  total  number  of  shares  out- 
standing.' When  I  asked  what  I  would  buy  them  with,  I  was 
told  that  I  still  had  $7,000,000  from  the  $57,000,000;  that  the 
brokers  would  carry  the  stock  on  a  50  per  cent  margin,  which 
would  allow  me  to  carry  $14,000,000  worth  of  stock.  Our  arrange- 
ment with  the  Government  was  that  we  would  own  no  more  than 
400,000  shares  of  stock.  I  was  told  to  buy  these  in  individual 
names ;  that  I  didn't  have  to  buy  them  in  the  name  of  the  com- 
pany. Stuart  said,  'For  goodness  sake,  own  the  majority,  or  you 
will  be  wiped  out  here.  You  can  see  your  danger.' 

"Several  days  later  the  representative  of  the  Telephone  Com- 
pany called  and  said,  'You  are  in  a  fine  spot,  aren't  you?  You 
had  better  hurry  and  buy  these  shares  before  someone  else  does/ 
I  followed  the  advice,  and  bought  260,900  additional  shares  in 
individual  names,  some  in  my  name  and  some  in  the  names  of 
my  children,  etc.  I  stripped  the  companies  of  all  the  cash  they 
had  to  make  this  acquisition,  acting  entirely  on  the  advice  of  my 
bankers  and  my  friends  in  the  Telephone  Company.  This  all 
occurred  in  the  months  of  May  and  June.  These  shares  were 
acquired  between  February  24th  and  June  1st.  In  the  meantime, 
the  Loew's  hadn't  bought  a  share  and  didn't  intend  to  buy  a 
share." 

So  now  the  total  of  the  obligations  of  W.  F,  is  seventy  mil- 
lions. He  has  borrowed  a  great  deal  of  money  from  various 
banks,  and  is  heavily  involved  in  the  stock  market.  He  looks  back 
on  it  now  and  wonders,  was  that  advice  given  to  him  by  his 
financiers  honest  advice,  or  were  they  deliberately  leading  him 
into  a  trap?  What  shall  we  think  about  it? 

Human  minds  are  complicated,  and  it  may  be  that  the  heads 
of  Halsey,  Stuart  &  Co.  and  of  the  Telephone  Company  would 
not  themselves  be  able  to  say  exactly  when  the  dream  of  taking 


78        UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

over  the  "pot  of  gold"  of  William  Fox  first  took  shape  in  their 
minds,  and  just  when  and  how  that  dream  became  changed  into 
a  determination.  The  time  when  Stuart  advised  the  stock  market 
purchases  was  a  time  when  everybody  in  America  was  buying 
everything,  in  the  certainty  that  no  matter  how  high  the  price,  it 
would  go  still  higher.  I  do  not  know  whether  foxes  ever  run  in 
packs,  but  I  have  read  about  wolves,  and  have  learned  that  a  wolf 
is  not  attacked  so  long  as  he  is  well  and  strong,  and  is  running 
at  the  head  of  the  pack.  It  is  only  when  something  happens  to 
him,  so  that  he  stumbles  and  falls,  that  the  other  wolves  fall  upon 
him  and  "merge"  him. 

And  so  it  was  with  this  Fox,  according  to  my  guess.  He 
didn't  need  much  stimulating  to  lead  him  to  buy.  He  had  behind 
him  those  two  tremendous  companies  with  no  indebtedness,  and 
earnings  of  sixteen  or  twenty  million  dollars  a  year.  Seventy  mil- 
lion dollars  of  new  financing  didn't  weigh  on  his  mind  in  the  least ; 
he  knew  that  he  could  offer  a  million  new  shares  of  Fox  Film  to 
the  stockholders  and  they  would  pay  $80  a  share  for  them  gladly. 
If  any  were  left  over,  the  great  firm  of  Halsey,  Stuart  &  Com- 
pany would  dispose  of  them  to  the  general  public,  W.  F.  was  so 
sure  of  himself,  and  of  his  great  companies,  and  of  his  great 
bankers,  that  he  was  even  willing  to  take  one  more  bite. 

In  that  spring  of  1929,  there  came  to  America  a  man  named 
Isador  Ostrer,  the  principal  stockholder  of  a  concern  known  as 
the  British  Gaumont  Company,  motion  picture  distributors  and 
owners  of  some  300  theatres  in  England,  including  the  best. 
Owing  to  hard  times  in  England  this  chain  was  for  sale,  and 
here  again  was  a  proposition  of  enormous  importance  to  the  Fox 
companies.  The  Fox  pictures  were  being  continuously  released 
in  Great  Britain,  and  at  a  great  disadvantage.  The  managing 
heads  of  the  Gaumont  concern  were  unfriendly  to  the  Fox  inter- 
ests, and  were  paying  the  Fox  companies  less  than  $500,000  per 
year.  But  if  this  purchase  was  made,  then  Gaumont  would  run 
Fox  pictures,  and  this  would  add  about  $5,000,000  a  year  to  the 
income  of  Fox  Film.  The  purchase  price  of  the  shares  offered, 
an  actual  majority  of  the  outstanding  shares,  was  $20,000,000, 
and  the  Fox  companies  would  be  repaid  this  investment  in  less 
than  five  years — without  taking  into  account  the  dividends  earned 
by  the  British  company  during  the  period. 


THE  MIDAS  TOUCH  79 

W.  F.  consulted  Halsey,  Stuart  &  Co.  on  this  matter.  Harry 
L.  Stuart,  head  of  the  firm,  was  in  London  at  the  time,  and 
W.  F.  had  Stuart's  New  York  office  cable,  and  thus  obtained 
a  complete  check  on  Ostrer  and  his  enterprises.  Before  the  pur- 
chase was  negotiated,  Stuart  returned  to  New  York,  and  W.  F. 
declares  that  the  matter  was  thoroughly  discussed  with  him. 
Stuart  arranged  for  various  London  banks  to  lend  the  Fox  com- 
panies $8,000,000  towards  the  purchase. 

Also  this  deal  was  discussed  with  John  E.  Otterson,  who 
represented  the  Telephone  Company.  Otterson  knew  Ostrer  well, 
having  met  him  in  London  on  a  recent  trip.  Otterson  had  been 
trying  to  sell  to  Ostrer  sound  equipment  for  his  300  British  the- 
atres ;  he  had  failed,  and  so  he  didn't  like  Ostrer  very  much ;  he 
said  that  Ostrer  "thought  himself  the  czar  of  everything  he  sur- 
veyed." But  if  Fox  would  buy  these  300  theatres,  he  would  put 
in  the  Telephone  Company's  equipment,  which  at  that  time  was 
costing  $25,000  a  set ;  300  times  that  would  be  a  nice  little  bill  of 
$7,500,000  for  the  Telephone  Company.  More  than  that,  the 
other  3,000  theatres  in  Great  Britain  would  have  to  follow  suit, 
and  there  would  be  a  still  nicer  bill. 

W.  F.  pointed  out  to  Otterson  that  he  already  owed  him 
$15,000,000,  and  had  not  yet  made  his  merger,  and  he  was  timid 
about  going  forward.  But  Otterson  said  that  was  all  right,  the 
Telephone  Company  was  behind  him;  if  necessary,  the  note  for 
$15,000,000  would  be  renewed.  When  W.  F.  hinted  that  he  ought 
to  have  that  in  writing,  Otterson  was  offended,  and  asked  if  he 
did  not  trust  his  friends. 

So  W.  F.  bought  the  Gaumont  theatres,  paying  $14,000,000  in 
cash,  and  giving  notes  for  six  million,  due  in  six  months.  Imme- 
diately the  Telephone  Company  got  its  contract  to  install  sound 
equipment  in  these  theatres,  and  so  everybody  was  happy.  W.  F. 
was  going  to  make  his  Loew  shares  pay  for  themselves  in  four 
years,  and  his  Gaumont  shares  in  less  time.  The  Fox  picture 
business  would  become  the  greatest  in  the  world,  and  that  was  the 
way  W.  F.  wanted  it. 


REEL  EIGHT 
RED  TAPE 

WE  HAVE  followed  through  these  various  purchases,  in 
order  to  make  a  consecutive  story.  But  we  must  now  go 
back  to  the  days  before  the  Loew  purchase,  in  order  to  become 
familiar  with  another  aspect  of  this  deal. 

One  of  the  major  problems  confronting  an  American  big 
business  man  who  wants  to  incorporate  some  new  company  into 
his  own,  is  the  problem  of  coming  to  an  arrangement  with  the 
Attorney-General's  office  of  the  United  States  Government.  We 
have  a  law  called  the  Sherman  Anti-trust  Act,  a  statute  which 
has  been  revised  and  edited  and  rewritten  by  innumerable  court 
decisions  until  it  has  become  a  labyrinth  to  which  the  justices  of 
our  United  States  Supreme  Court  themselves  do  not  possess  a 
key.  We  have  seen  that  the  Government  has  graciously  per- 
mitted the  moving  picture  makers  to  do  the  very  thing  which  it 
sternly  forbade  the  Chicago  meat  packers  to  do — that  is  to  own 
and  operate  their  means  of  retail  distribution. 

The  use  of  this  comparison  brings  me  a  letter  of  protest 
from  W.  F.  He  does  not  like  to  be  compared  with  the  "beef 
trust/'  and  explains  in  detail  the  reasons  which  compelled  him 
to  begin  buying  chains  of  theatres.  There  had  been  formed  what 
was  practically  a  motion  picture  trust,  through  the  alliance  of 
the  Loew  family  with  that  of  Zukor,  president  of  Paramount, 
These  two  big  concerns  had  an  understanding  between  them. 
They  would  run  each  other's  pictures  in  their  chains  of  theatres, 
but  they  would  not  run  the  pictures  of  any  outsider.  It  made 
no  difference  how  good  the  Fox  pictures  might  be,  the  exhibitors 
decided  that 'they  were  not  worthy  of  exhibition.  If  they  used 
Fox  pictures  at  all,  they  would  use  them  in  third  or  fourth  grade 
houses,  and  then  only  when  the  joint  products  of  Loew  and 
Paramount  were  insufficient  in  number  to  fill  these  houses.  So 

80 


RED  TAPE  81 

of  course  it  became  necessary  for  Fox  to  get  his  own  theatres, 
and  when  he  had  purchased  the  West  Coast,  and  controlled  every- 
thing in  eleven  states,  then  and  then  only  was  he  able  to  make 
a  satisfactory  deal  with  Loew  and  Paramount.  Says  W.  F. : 

"I  would  not  like  to  have  myself  presented  to  the  public  as 
one  who  hoped  to  stifle  the  middleman  and  destroy  him  for  the 
benefit  of  the  Fox  Film  stockholders ;  for  the  independent  exhib- 
itor throughout  all  of  the  United  States,  as  well  as  throughout 
the  rest  of  the  world,  knows  that  William  Fox  stood  for  the  inde- 
pendence of  the  independent  exhibitor,  and  fought  the  exhibitor's 
battles,  beginning  with  the  breaking  of  the  trust  in  1912.  The 
independent  exhibitors  of  the  United  States  and  other  countries 
of  the  world  recognize  William  Fox  as  their  friend  and  not  as 
their  enemy." 

I  admit  all  that.  I  hope  that  no  one  will  get  the  idea  that 
my  comparison  means  that  I  am  comparing  the  product  of  the 
picture  studios  with  that  of  the  packing-houses.  I  am  merely 
pointing  out  what  seems  to  me  an  obvious  fact :  that  in  one  case 
the  Government  forbade  a  certain  group  of  manufacturers  to 
own  the  means  of  retail  distribution  of  their  product,  while  in 
the  case  of  another  group  of  manufacturers  it  permitted  this 
to  happen.  W.  F.'s  own  argument  concedes  this,  for  he  tells 
how  Loew  and  Paramount  combined  to  freeze  him  out  of  the 
means  of  retail  distribution  which  they  controlled.  I  am  sure 
that  back  in  the  days  of  the  fight  upon  the  "beef  trust/'  if  you 
had  questioned  the  Armours  as  to  why  they  considered  it  neces- 
say  to  set  up  butcher  shops  all  over  the  United  States,  they 
would  have  answered  that  it  was  because  the  butcher  shops 
owned  by  Swift  and  Morris  sold  only  the  meat  products  of 
Swift  and  Morris  and  refused  to  deal  in  the  meat  products  of 
•Armours. 

The  fact  that  one  maker  of  motion  pictures,  William  Fox, 
favored  the  independents  and  protected  them,  has  nothing  to 
do  with  the  legal  point  I  am  making — although,  of  course,  it  is 
very  important  to  this  story,  and  I  am  glad  to  bring  it  out. 

If  you  are  a  manufacturer  of  either  meat  or  motion  pictures, 
and  desire  to  purchase  a  rival  concern,  what  you  have  to  do 
is  to  go  and  call  upon  the  Attorney-General's  office.  In  nor- 
mal times  you  will  find  that  it  is  a  question  of  what  friends 


82       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

you  have,  and  what  enemies.  In  abnormal  times  you  are  at 
the  mercy  of  political  thunderstorms.  If,  for  example,  Theodore 
Roosevelt  is  President,  and  is  posing  as  the  people's  friend, 
then  the  Attorney-General's  office  will  start  out  on  a  "trust-bust- 
ing" campaign,  and  the  only  way  you  can  make  a  merger  is  first 
to  precipitate  a  panic,  as  the  elder  Morgan  did  in  1907,  thus 
forcing  from  Roosevelt  permission  to  take  the  Tennessee  Coal  & 
Iron  Company  into  the  steel  trust  On  the  other  hand,  if  the 
president  is  an  easy-going  boon  companion,  like  Harding,  you  can 
do  about  anything  you  please. 

The  Government  had  made  no  objection  to  the  purchase  of 
the  West  Coast  and  other  chains  of  theatres,  because  each  of 
these  was  in  a  different  locality,  and  no  competitors  were  involved. 
But  the  Loew  Company  owned  theatres  in  the  same  cities  with 
Fox,  and  the  Fox  production  unit  was  of  course  a  direct  com- 
petitor of  Metro-Goldwyn-Mayer.  So  there  was  a  chance  of 
trouble. 

During  the  negotiations  for  the  Loew  purchase  W.  F.  was 
caught  between  two  administrations.  Hoover  had  been  elected 
early  in  November,  but  Coolidge  was  still  president  until  March. 
What  was  going  to  be  the  policy  of  the  new  administration  was 
something  which  a  great  many  people  were  anxiously  trying  to 
find  out. 

W.  F.  went  to  Washington  to  consult  the  Department  of  Jus- 
tice, and  was  told  that  the  person  he  had  to  talk  with  was  Col. 
William  J.  Donovan,  known  to  the  newspapers  as  "Wild  Bill." 
Colonel  Donovan  was  Assistant  United  States  Attorney-General, 
and  just  then,  in  the  middle  of  January,  1929,  was  chairman  of  the 
Boulder  Dam  project;  so  W.  F.  went  out  to  Santa  Fe,  New 
Mexico,  and  explained  matters  to  him.  Donovan  said  that  he 
had  his  hands  full  with  the  Boulder  Dam  project,  but  that  if 
W.  F.  would  dictate  a  statement  to  Donovan's  secretary,  Donovan 
would  send  a  copy  of  it  to  his  assistant  in  Washington,  Mr. 
Thompson,  who  would  sit  down  with  W.  F.'s  lawyer  and  find  a 
way  to  work  things  out. 

So  W.  F.  dictated  a  statement,  telling  the  Government  that 
great  economies  were  required  in  the  motion  picture  business  and 
must  be  made  immediately. 

"From  our  records  it  was  clear  that  of  the  gross  money  we 


RED  TAPE  83 

were  receiving  for  the  pictures  we  made  and  released,  at  least 
40  per  cent  came  from  other  countries.  By  this  time,  Fox  Film 
had  a  rental  agency  in  every  country  in  the  civilized  and  non- 
civilized  world  other  than  Russia,  and  it  had  come  into  my  mind, 
what  was  going  to  occur  when  an  English-speaking  picture  was 
going  to  Czechoslovakia  or  to  Hungary  or  to  Roumania  or  China 
or  Japan,  from  which  countries  we  were  receiving  substantial 
revenues?  It  was  clear  we  could  not  make  talking  pictures  in 
every  language,  and  I  could  see  no  reason  why  these  obscure 
countries  would  change  their  language  to  suit  the  American  pro- 
ducer. I  reached  a  conclusion  that  it  would  be  necessary  to  reor- 
ganize our  entire  business  so  as  to  meet  this  new  condition.  A 
survey  had  been  made  of  the  situation  during  1928,  and  when 
the  figures  were  compiled,  there  was  a  clear  indication  that  the 
Loew  Company  and  the  Fox  Company  were  wasting  by  duplica- 
tion of  their  work  a  minimum  of  $17,000,000.  Here  was  a  saving 
that  would  be  greater  than  the  loss  in  revenue.  Fox  Film  and 
Metro-Goldwyn-Mayer  were  running  two  sets  of  executives,  two 
sets  of  studios  were  competing  for  the  purchase  of  stories,  for 
the  price  of  the  performer  and  director,  and  when  pictures  were 
completed,  they  would  rent  them  to  the  exhibitors,  and  had  some 
two  hundred  offices  throughout  the  world  in  which  was  carried 
on  the  rival  business. 

"I  explained  to  the  Government  that  I  felt  there  was  a  respon- 
sibility to  retain  for  our  country  the  well-earned  position  that  it 
had  in  the  making  and  distributing  of  motion  pictures  throughout 
the  world.  I  felt  that  if  the  picture  companies  were  deprived 
of  a  great  part  of  their  foreign  revenue,  they  might  get  to  a 
place  where  they  could  not  carry  on.  I  hoped  to  be  able  soon 
to  make  foreign  language  pictures,  to  hold  our  business  abroad. 
I  tried  to  bring  these  Government  officials  to  realize  that  Ameri- 
can trade  follows  American  pictures,  and  not  the  American  flag  ; 
that  the  Government's  duty  was  to  try  to  retain  the  supremacy 
of  picture  making  in  this  country ;  that  even  if  this  consolidation 
did  not  entirely  conform  to  laws  on  our  books,  that  if  a  condition 
of  this  kind  arose,  it  was  their  duty  to  help  to  retain  this  industry 
for  America." 

W.  F.  is  a  business  executive,  accustomed  to  making  up  his 
mind  quickly  and  then  acting.  But  now  he  was  making  acquaint- 


84        UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

ance  with  the  ways  of  bureaucracy.  Copies  of  his  statement 
were  sent  to  the  Government  officials  and  the  lawyers,  and  W.  F. 
went  to  Los  Angeles,  so  as  to  be  near  Donovan  in  Santa  Fe. 
Time  passed,  and  each  day  he  called  his  lawyers  in  New  York  to 
find  out  what  had  been  done,  and  nothing  had  been  done.  He 
waited  in  Los  Angeles  for  thirty  days  and  then  he  went  back  to 
New  York.  There  his  lawyer  informed  him  that  only  half  an 
hour  ago  Thompson,  the  department  official,  had  consented  to 
the  acquisition  of  the  400,000  shares,  and  that  the  lawyer's  advice 
now  was  to  make  the  acquisition,  Saul  E.  Rogers,  the  lawyer, 
said  that  he  hadn't  asked  for  consent  in  writing,  because  such 
consent  would  have  been  one  of  their  stock  letters  with  a  lot 
of  "ifs"  and  "ors"  in  it,  and  he  would  be  better  off  without  that. 
"I  would  rather  have  his  word  than  a  written  communication, 
because  there  are  no  strings  attached  to  his  word."  At  this  time 
it  was  generally  understood  that  Donovan  was  to  be  Hoover's 
Attorney-General,  and  so  everything  was  all  right. 

It  was  a  close  shave,  because  Mr.  Schenck,  the  president  of 
Loew's,  was  becoming  impatient.  When  W.  F.  had  gone  to  see 
Donovan,  he  had  told  Schenck  that  he  would  be  back  within 
eight  days.  Schenck's  reason  for  impatience  was  that  Warner 
Brothers  had  been  pressing  him.  The  Warners  apparently  con- 
sidered that  they  could  pull  other  political  wires  than  Fox,  and 
would  be  allowed  to  do  what  he  wouldn't  be  allowed  to  do. 
Anyway,  they  had  made  an  offer  of  $56,000,000,  which  would 
have  made  $6,000,000  more  in  Schenck's  own  pocket.  Says 
W.  F.: 

"The  Loew  family  had  commissioned  Schenck  to  sell  these 
shares,  and  had  given  him  an  option  for  their  acquisition  at 
somewhere  around  $100  a  share,  and  in  the  deal  with  me  he  was 
earning  somewhere  around  $10,000,000,  over  and  above  the  price 
he  had  to  pay  to  the  Loew  family.  If  he  could  have  carried  out 
his  Warner  deal,  he  could  have  made  $6,000,000  more.  I  car- 
ried on  these  negotiations  for  some  six  months  and  had  not  been 
pressed,  but  one  Sunday  Schenck  became  very  impatient,  and 
I  asked  him  to  allow  me  until  Tuesday,  and  if  I  didn't  have  the 
money  then,  it  was  all  off.  On  Monday  I  went  to  the  Telephone 
Company  and  Halsey,  Stuart,  and  made  arrangements  for  the 
purchase." 


RED  TAPE  85 

That  was  on  February  24th,  and  on  March  4th,  Hoover  was 
inaugurated,  and  very  soon  his  cabinet  was  announced,  and  the 
Attorney-General  was  no  "Wild  Bill/'  but  a  tame  gentleman 
named  Mitchell.  W.  F.  was  uneasy,  and  sent  his  lawyers  to  this 
new  Attorney-General,  who  told  them  that  the  matter  would  not 
be  handled  by  Mitchell,  but  by  his  assistant,  who  had  not  yet 
been  appointed.  The  appointment  was  made  in  June,  and  it  was 
a  gentleman  named  John  Lord  O'Brian.  Very  soon  W.  F.  and 
his  lawyer  went  to  interview  this  gentleman,  and  there  were 
present  in  the  room  four  persons,  William  Fox,  Saul  E.  Rogers, 
John  Lord  O'Brian,  and  that  Mr.  Thompson  who  had  told  Rogers 
that  it  was  all  right  to  acquire  the  shares. 

"Mr.  Rogers  said  that  we  had  come  to  visit  Mr.  O'Brian  for 
the  purpose  of  discussing  the  consolidation  of  the  Fox  Company 
and  Loew's ;  that  we  had  acquired  400,000  shares  of  stock  with 
the  consent  of  the  department,  and  we  would  now  like  to  discuss 
the  method  to  employ  for  its  consolidation,  Mr.  O'Brian,  after 
examining  the  papers  said,  'I  see  nothing  in  this  record  that  indi- 
cates that  we  have  ever  consented  to  your  acquiring  these  400,000 
shares;  in  fact,  as  I  read  this  record,  I  find  the  opposite,  we 
warned  you  against  it/  I  spoke  up  then  and  said,  'Mr,  O'Brian, 
we  don't  have  to  refer  to  the  records.  You  and  I  are  fortunate 
to  have  in  this  room  the  very  two  men  who  reached  this  agree- 
ment. Mr.  Rogers  and  Mr.  Thompson  met  in  New  York,  and 
after  a  long  drawn-out  conference  for  a  period  of  thirty  days, 
in  which  they  discussed  whether  the  department  had  any  objec- 
tions, Mr.  Thompson  told  him  that  the  department  consented  to 
the  acquisition  of  these  shares,  or  that  the  department  had  no 
objection,  and  based  on  that  word,  three  days  later  I  passed  a 
check  of  $50,000,000  to  the  Loew  family/  I  then  turned  to 
Mr.  Thompson  and  said,  'Won't  you  please  talk  up?  Is  it  or  is 
it  not  a  fact  that  you  came  to  New  York  and  told  Mr.  Rogers 
that  it  was  all  right  to  purchase  these  shares?'  He  said  he  would 
rather  answer  that  question  when  his  chief  put  it  to  him.  I  then 
turned  to  Mr.  O'Brian  and  asked  him  to  ask  Thompson  that 
question,  and  O'Brian  said  he  would  ask  it  at  another  time.  With 
that  he  rose,  and  there  was  nothing  else  left  for  us  to  do  but 
rise  and  leave. 

"Shortly  thereafter  two  investigators  appeared  in  New  York 


86       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

and  wanted  to  know  the  complete  details  of  the  acquisition  of 
these  shares.  They  wanted  to  know  the  exact  number  of  shares 
we  owned,  was  it  400,000  or  was  it  more.  They  wanted  to  know 
where  the  money  came  from  and  many  other  questions.  I  then 
sought  the  advice  of  some  friends  who  knew  the  workings  of 
the  Government,  and  informed  them  that  these  men  had  been 
in  New  York  and  were  making  an  investigation;  that  I  felt  I 
was  being  annoyed  unnecessarily,  and  I  believe  we  then  received 
a  letter  from  the  Department  of  Justice  asking  us  to  divest  our- 
selves of  these  shares." 

It  was  necessary  to  use  some  influence,  and  W.  F.  considered 
that  he  had  it.  He  sought  an  appointment  with  the  President, 
and  was  invited  to  luncheon  at  the  White  House.  Before  we 
tell  about  this  interview,  it  will  be  necessary  to  step  back  a  few 
months  and  see  just  what  had  been  the  relationship  between 
William  Fox  and  Herbert  Hoover.  The  former  is  an  ardent 
admirer  of  the  latter,  and  considers  that  Hoover  did  a  great  deal 
to  help  him.  To  me,  having  heard  the  whole  story,  it  appears 
that  Hoover  exhibited  his  customary  indecision  and  ineffective- 
ness, and  that  what  he  gave  W.  F.  was  the  customary  political 
"hand-out"  of  palaver  and  promises.  In  short,  I  think  W.  F. 
was  one  of  many  thousands  of  victims  of  the  White  House  meal 
ticket  system.  Having  received  one  of  these  meal  tickets  myself, 
way  back  in  the  "Teddy"  Roosevelt  days,  I  know  how  impressive 
they  are.  However,  here  is  the  story,  exactly  as  W.  F.  tells  it, 
and  you  can  judge  for  yourself. 

An  intimate  friend  of  W.  F/s  was  Albert  M.  Greenfield, 
chairman  of  the  Bankers'  Securities  Corporation  of  Philadelphia. 
W.  F.  was  a  director  in  his  friend's  company,  and  also  a  debtor 
to  the  company  to  the  extent  of  $10,000,000,  part  of  the  pur- 
chase money  of  the  Loew  shares.  Greenfield  was  an  active 
politician,  and  had  done  his  best  to  obtain  the  seating  of  Vare, 
who  had  been  elected  to  the  United  States  Senate,  but  had  been 
refused  his  seat  on  account  of  charges  of  election  frauds.  W.  F. 
had  worked  with  Greenfield  for  more  than  a  year  in  the  effort 
to  seat  Vare,  but  in  vain.  In  the  summer  of  1928,  prior  to  the 
Republican  nominating  convention  at  Kansas  City,  Greenfield 
had  come  to  W.  F.  with  a  story  that  Mellon  was  going  to  try- 
to  nominate  Coolidge  at  that  convention,  and  that  if  Mellon 


RED  TAPE  87 

succeeded  in  this,  Vare  would  be  kept  out  of  his  seat,  because 
Mellon  was  his  enemy  and  Coolidge  was  Mellon's  man.  Green- 
field had  met  Hoover  many  times  and  liked  him,  thought  he 
would  make  a  great  President — and  also  thought  that  he  would 
help  to  seat  Vare. 

So  W*  F.  and  Greenfield  discussed  how  they  could  bring 
about  Hoover's  nomination  at  Kansas  City.  Ever  since  the  sign- 
ing of  the  Declaration  of  Independence,  the  delegates  of  Pennsyl- 
vania had  always  voted  as  a  unit,  but  now  Greenfield  thought 
there  might  be  a  split.  He  had  learned  that  Mellon  wasn't 
coming  to  Kansas  City  until  Monday  morning,  and  he  had  a 
plan  to  "dish"  him. 

"He  proposed  selling  Vare  the  idea  to  let  the  Philadelphia 
Republicans  vote  independently  of  the  rest,  and  to  announce  on 
Sunday  night,  the  night  before  the  convention,  that  for  the  first 
time  in  the  history  of  Republican  politics  the  Pennsylvania  dele- 
gation had  split;  Philadelphia  was  for  Herbert  Hoover.  He 
actually  did  that.  His  announcement  caused  the  greatest  excite- 
ment at  the  Kansas  City  convention,  and  Greenfield  felt  that 
as  a  result  of  that  Herbert  Hoover  was  nominated," 

Soon  after  Hoover's  nomination,  but  before  his  election, 
Greenfield  took  W.  F.  to  Washington,  and  introduced  him  to 
Hoover.  W,  F.  pointed  to  Greenfield  and  said :  "You  can  blame 
that  little  bald-headed  Hebrew  Jew  who  made  it  possible  for  you 
to  become  the  President  of  the  United  States."  W.  F.  reports 
that  "Hoover  naturally  was  vitally  interested  to  learn  the  details 
of  how  this  came  about." 

W.  F.  told  Hoover  of  his  great  admiration  for  him,  and  of 
his  desire  to  see  him  elected  president.  In  talking  to  me,  W.  F, 
explained  his  reasons  in  detail,  and  I  listened  with  no  little  inter- 
est. Ever  since  "The  Brass  Check"  and  "The  Goose-step"  were 
published,  my  critics  have  been  saying  that  I  attributed  to  the 
masters  of  finance  in  America  too  high  an  intelligence  and  too 
clear  an  understanding  of  their  own  interests.  According  to 
my  critics,  these  masters  of  finance  just  blunder  along,  controlling 
politics  and  education  and  movies  and  radio  in  their  own  interest, 
without  really  knowing  that  they  are  doing  it,  or  why  or  how 
they  are  doing  it.  I  am  sure  that  William  Fox  in  any  dealings 
he  has  had  with  politics  and  politicians,  has  known  exactly  what 


88       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

he  was  doing,  and  why  he  was  doing  it.    I  am  glad  that  he  is 
willing  to  tell  about  it  frankly. 

"I  told  Greenfield  that  I  was  an  admirer  of  Mr.  Hoover,  and 
that  I  was  desirous  of  working  for  his  election,  and  that  my 
companies  could  be  instrumental  in  his  election;  that  the  Fox 
Film  Corporation  made  and  released  in  the  theatres  of  America 
the  Fox  Movietone  News,  and  that  I  would  be  happy  to  devote 
it  in  behalf  of  Herbert  Hoover;  that  the  Fox  Movietone  News 
had  10,000,000  theatre  patrons,  and  I  considered  it  a  very  strong 
force,  and  a  great  ally  for  any  political  party  to  have," 

And  at  the  talk  with  Hoover,  W,  F.  repeated  the  same  thing 
to  him; 

"I  told  him  of  my  admiration  for  him  and  of  my  willingness 
to  work  for  his  election.  I  told  him  frankly  of  my  using  Movie- 
tone. News  in  behalf  of  his  nomination,  and  that  for  the  election 
campaign  I  would  be  glad  to  take  the  most  efficient  executive  I 
had,  and  put  him  in  charge  of  all  the  picture  work  that 
Mr,  Hoover  would  like  to  have.  Mr.  Hoover  replied  that  my 
offer!  was  the  most  generous  one  that  he  had  as  yet  received 
during  his  campaign,  and  that  he  appreciated  it." 

So  W.  F.  spent  great  sums  of  money,  and  gave  a  great  deal 
of  time  to  Hoover's  cause.  He  tells  me  that  it  was  with  no  defi- 
nite idea  of  asking  anything  in  return.  But  suddenly  he  found 
himself  in  need  of  a  return,  and  he  was  invited  to  luncheon  with 
the  President. 

"After  we  had  adjourned  to  his  smoking  room,  I  frankly  told 
him  of  my  great  embarrassment.  He  listened  to  it  attentively; 
he  was  vitally  interested.  The  reasons  for  his  interest  were 
apparent — I  had  claimed  that  an  injustice  had  been  done  to  me 
by  the  Department  of  Justice.  Before  I  had  left,  he  had  requested 
that  my  attorney,  the  attorney  for  my  company,  the  one  who 
had  made  this  arrangement  with  the  department,  go  back  to  the 
department  some  time  later  and  have  another  talk.  I  suggested 
that  perhaps  I  ought  to  engage  some  outstanding  outside  counsel, 
but  he  resented  that.  I  was  to  incur  no  expense ;  my  lawyer  could 
do  the  whole  thing  and  do  it  very  well ;  in  fact,  that  is  the  way 
he  wanted  it  done." 

•      So  W.  F.  thought  that  he  was  all  right.    But  alas  for  those 
who  put  their  trust  in  princes !    W.  F/s  lawyer  went  to  see  the 


RED  TAPE  89 

department  officials  again  and  again,  but  somehow  or  other  noth- 
ing happened.  "Unfortunately,  I  felt  my  lawyer  was  not  making 
the  progress  that  he  should  have." 

W.  F.  was  "on  the  spot/'  as  the  phrase  has  it,  and,  of  course, 
it  was  known  among  his  friends  and  associates,  and  also  among 
his  enemies,  that  he  was  occupying  this  uncomfortable  position. 
Somebody  more  powerful  than  Herbert  Hoover  would  have  to 
be  enlisted  in  his  behalf — or  at  any  rate,  someone  more  direct 
and  decisive. 

Colonel  Huston,  treasurer  of  the  Republican  National  Com- 
mittee, came  to  W.  F.  and  inquired  whether  he  knew  a  man  by 
the  name  of  Louis  B.  Mayer.  W.  F.  answered  that  he  did,  and 
presently  he  realized  that  he  was  getting  a  tip.  Said  Colonel 
Huston:  "He  seems  to  be  a  nice  sort  of  chap.  Why  don't 
you  call  him  up  some  time?  Why  don't  you  ask  him  to  come 
to  see  you?" 

So  W.  F.  did  call  him  on  the  telephone,  this  in  the  latter  part 
of  June,  and  four  days  later  Louis  B.  Mayer  came  to  see  him. 
For  the  benefit  of  the  uninitiated,  I  explain  that  Mayer  is  presi- 
dent of  Metro-Goldwyn-Mayer ;  also  a  very  prominent  and  active 
worker  in  the  Republican  party,  being  chairman  of  the  California 
State  Committee  of  the  party,  and  a  popular  orator  at  conven- 
tions and  banquets. 

Mayer  occupied  just  then  a  peculiar  relationship  to  W.  F., 
in  that  W,  F.  was  about  to  merge  him.  You  understand  that 
Metro-Goldwyn-Mayer  is  owned  by  Loew's,  Inc.,  and  W.  F. 
has  purchased  the  control  of  both  companies,  and  is  contemplat- 
ing taking  over  Mayer's  elaborate  and  expensive  plant  in  Holly- 
wood, and  his  hundred  or  so  distribution  centers  throughout  the 
world,  and  making  them  all  a  part  of  the  Fox  S3^stem.  Naturally, 
Mayer  has  not  been  oblivious  or  indifferent  to  such  an  effort. 
Back  in  February,  when  the  news  had  spread  that  Fox  had 
bought  Loew,  W.  F.  was  asked  for  a  conference  by  Mayer, 
Rubin  and  Thalberg.  Says  W.  F. : 

"These  three  gentlemen  are  the  owners  of  a  company  which 
had  leased  their  services  to  the  Metro-Goldwyn-Mayer  Company. 
They  were  employed  there  under  a  contract  that  had  still  two 
years  to  run.  Under  the  terms  of  that  contract,  after  $2  a  share 
is  paid  on  the  common  stock,  these  three  gentlemen  get  20  per 


90       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

cent  of  the  earnings.  I  think  tinder  that  contract  in  1929  they 
collected  about  $3,000,000.  They  were,  of  course,  alarmed  at 
the  acquisition  of  this  stock.  They  had  two  years  more  to  go 
and  they  would  be  materially  affected  by  it.  When  they  sent 
for  me,  I  thought  their  purpose  was  to  discuss  whether  or  not 
their  contract  would  be  continued. 

"They  told  me  they  had  been  improperly  treated.  Here  they 
claimed  to  have  built  this  company  up  and  made  it  the  great 
success  it  was,  and  now  when  $50,000,000  was  paid  for  400,000 
shares  of  stock,  they  were  not  asked  to  contribute  their  stock 
In  that  sale.  They  were  entitled  to  part  of  that  $50,000,000. 
Schenck,  having  played  so  fair  with  me  from  the  beginning, 
since  he  had  a  chance  to  sell  these  shares  for  $6,000,000  more  than 
I  ultimately  paid  for  them,  I  felt  I  should  refute  any  charge  of 
unfairness  on  his  part. 

"I  took  the  attitude  that  Schenck  was  fair.  I  took  the  posi- 
tion that  these  men  had  no  grievance.  They  had  an  unusual 
contract,  and  I  had  definitely  in  mind  the  purpose  to  make  a  new 
deal,  more  advantageous  for  both  companies.  We  had  several 
conferences,  and  in  all  of  them  I  sided  with  Schenck.  I  did, 
in  my  conversation,  discover  that  none  of  them  owned  any  stock. 
What  they  would  have  liked  to  do  was  to  buy  some  of  these 
shares  on  the  market,  and  sell  them  for  more  than  twice  as  much 
as  they  bought  them  for.  I  told  them  that  they  hadn't  expressed 
any  faith  in  their  company,  by  the  mere  fact  that  they  had  not 
seen  fit  to  invest  any  of  their  money  in  the  stock  of  that  com- 
pany. They  said  they  had  owned  some  at  one  time,  but  had  been 
advised  by  Schenck  to  sell  it.  As  a  result,  I  incurred  their 
animosity  in  these  conferences/' 

Now  "Louis  B.,"  as  he  is  familiarly  known  in  the  studios, 
comes  for  another  conference  with  the  man  who  is  planning  to 
merge  him.  Says  W.  F. : 

"It  was  my  job  now  to  make  him,  my  friend  if  I  could.  While 
no  one  had  told  me  that  he  had  anything  to  do  with  my  difficulties 
with  the  Attorney-General,  I  surmised  he  had.  I  had  reached 
a  conclusion  that  perhaps  Mayer,  Thalberg  and  Rubin  should 
have  gotten  some  of  the  money  in  the  Loew  deal,  although  that 
was  none  of  my  business.  Mayer,  after  the  usual  greetings, 
started  the  discussion,  expressing  his  displeasure  at  the  whole 


RED  TAPE  91 

transaction ;  how  hard  he  had  worked  to  build  up  this  company ; 
that  it  was  his  great  effort,  and  not  Schenck's.  He  was  offended 
at  the  position  I  took  immediately  after  the  purchase,  my  attack- 
ing his  contract;  that  he  was  going  to  use  every  means  in  his 
power  to  prevent  this  consolidation,  legally  and  otherwise.  I 
said  that  was  his  privilege,  if  he  felt  his  interests  would  be 
affected.  But  I  told  him  that  if  he  couldn't  stop  this  thing  legally, 
what  was  the  use  of  doing  it  illegally.  And  finally,  as  he  became 
cooled  down,  I  said,  fl  didn't  ask  you  to  come  here  to  hear  this 
talk.  You  must  have  realized  that  I  had  a  plan  in  the  back  of 
my  mind.  I  have  reconsidered  this  transaction,  and  I  have 
reached  the  conclusion  that  you  have  not  been  treated  properly. 
I  asked  myself:  supposing  Schenck  had  asked  $52,000,000  for 
these  400,000  shares— $50,000,000  was  entirely  an  arbitrary  price. 
There  was  no  such  value,  and  the  only  reason  it  had  the  value 
was  because  of  the  consolidation,  and  because  $17,000,000  could 
be  saved  in  the  consolidation  of  these  companies.' 

"So  I  said  to  Mayer:  'If  we  can  merge  these  two  companies, 
I  am  willing  to  recommend  to  our  company  to  pay  you  and  your 
associates  $2,000,000,  just  as  though  we  originally  paid 
$52,000,000.  We  will  pay  you  $2,000,000,  if  and  when  this  con- 
solidation is  made.  We  will  at  that  time  discuss  with  you  a  new 
contract  on  an  entirely  different  basis  from  the  present  -one/  He 
said  he  recognized  that  the  contract  would  have  to  be  changed, 
and  that  they  were  ready  to  change  it  on  any  fair  proposal  I 
was  going  to  make.  He  said,  'You  are  a  strange  man.  When 
I  first  came  here  this  morning  and  threatened  you,  you  looked 
me  square  in  the  eye  and  said,  'You  can  take  any  remedy  you 
like  and  be  damned/  You  were  as  positive  of  your  position,  and 
I  got  nowhere.  To  me  it  looked  as  if  I  had  made  the  trip  in  vain. 
Now  you  are  making  me  your  friend.  You  inform  me  that  you 
are  about  to  present  me  with  $2,000,000 ;  you  tell  me  that  you 
didn't  buy  the  studio,  but  that  you  bought  this  company  because 
of  my  ability.  That  is  a  compliment.  You  make  the  stipulation 
you  will  give  me  this  $2,000,000  if  and  when  these  companies 
merge.  You  must  have  known  that  I  have  moved  heaven  and 
earth  to  prevent  this  consolidation.  Surely  you  felt  that  someone 
used  his  influence  to  have  the  Government  change  its  opinion 
with  reference  to  the  acquisition  of  these  shares.  I  was  respon- 


92       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

sible  for  that,  and  it  was  a  perfectly  easy  matter.  But  now  you 
have  given  me  a  difficult  task.  How  am  I  going  to  get  them  to 
change  their  opinion  back  again  ?  However,  that  is  my  task,  and 
I  think  I  can  do  it/  That  concluded  our  talk,  both  parting  as 
the  best  of  friends." 

Apparently  Louis  B.  Mayer  was  able  to  do  in  the  Attorney- 
Generars  office  what  Herbert  Hoover  wasn't  able  to  do;  for 
nothing  more  was  heard  about  the  order  to  William  Fox  to 
divest  himself  of  the  Loew  shares.  Instead,  Colonel  Huston 
now  told  him  that  everything  was  all  right ;  only  one  thing  was 
needed.  There  had  existed  some  kind  of  contract  between  Loew's 
and  Paramount,  and  also  there  had  been  a  sort  of  royal  alliance 
between  the  two  houses.  Marcus  A.  Loew  had  a  son,  and  the 
president  of  Paramount  had  a  daughter,  and  these  two  had  been 
married*  The  Department  of  Justice  did  not  require  that  this 
marriage  should  be  abrogated,  but  they  did  want  the  business 
contract  abrogated,  because  it  would  look  as  if  Fox  were  absorb- 
ing not  merely  Loew's  but  also  Paramount.  W.  F.  had  learned 
that  the  Warners  also  were  anxious  to  have  this  arrangement 
cancelled,  because  they  wanted  to  absorb  Paramount,  and  couldn't 
do  it  so  long  as  Paramount  was  tied  up  with  Loew. 

W.  F.  made  a  date  to  play  golf  with  Schenck,  the  president 
of  Loew's,  at  the  Lakeview  Country  Club,  on  the  morning  of 
Wednesday,  July  17,  1929.  I  should  have  told  you  before  this 
that  W.  F.  is  an  ardent  golf  enthusiast,  and  frequently  makes 
his  business  deals  on  the  golf  course.  You  may  be  puzzled  to 
understand  how  a  man  can  play  golf  when  he  cannot  lift  his  left 
arm  above  his  shoulder;  you  may  find  it  hard  to  believe  that 
W.  F.  does  his  golf  playing  with  his  right  arm  alone.  Not  only 
does  lie  do  this,  but  he  manages  to  beat  most  of  his  two-armed 
rivals,  and  proves  his  faith  in  himself  by  betting  his  money  on 
the  outcome.  He  told  me  a  hair-raising  story  about  betting  $1 
at  the  first  hole,  $2  at  the  second  hole,  $4  at  the  third,  $8  at  the 
fourth,  and  so  on  up.  You  can  figure  out  according  to  the  laws 
of  geometrical  progression  what  this  sum  amounted  to  at  the 
eighteenth  hole.  But  fortunately  it  all  ended  happily,  W.  F.  won 
his  money  back,  and  so  I  do  not  have  to  record  that  any  of  his 
business  difficulties  were  due  to  losses  on  the  golf  course.  In 
the  New  York  newspapers  I  read  that  he  is  credited  with  having 


RED  TAPE  93 

three  times  achieved  the  feat  of  a  "hole  in  one" — a  truly  amazing 
thing  for  a  one-armed  player. 

He  was  never  more  sure  of  himself  in  his  life  than  on  that 
July  morning  as  he  was  rolling  on  his  way  to  the  golf  course. 
"While  my  car  was  riding  to  Long  Neck,  I  was  dreaming  of 
the  perfect  conclusion.  Life  had  just  begun,  and  this  was  to 
be  the  greatest  stepping-stone  of  my  career.  At  fifty-one,  I  was 
to  be  the  head  of  the  largest  company  of  its  kind  in  the  world/' 

But  we  know  what  Robert  Burns  says  about  the  best  laid 
schemes  of  mice  and  foxes.  The  chauffeur  who  was  driving 
this  Fox  had  lost  his  way,  and  they  lound  themselves  on  an 
untraveled  and  obscure  road  with  no  cars  in  sight.  They  had 
reached  a  crossing,  going  slowly,  perhaps  twenty  miles  an  hour, 
uncertain  which  way  to  turn.  There  was  a  hill  which  hid  from 
their  view  someone  coming  from  the  left.  As  they  made  the 
crossing,  a  car  came  down  the  hill  at  a  high  rate  of  speed,  driven 
by  an  inexperienced  woman  driver.  The  car  of  William  Fox. 
was  almost  across ;  in  another  foot  it  would  have  been  safe.  But 
that  extra  foot  made  the  difference  between  success  and  failure 
for  the  dreams  of  W.  F.  There  was  a  crash,  and  his  car  began 
turning  in  the  air,  and  the  next  thing  he  knew  he  and  a  friend 
who  was  with  him  were  crawling  out  from  underneath  the  car. 

The  first  thing  W.  F.  saw  was  his  chauffeur,  dead.  The  car  had 
fallen  on  his  neck  and  broken  it.  Blood  was  streaming  all  over 
W.  F.  from  his  own  head.  He  staggered  to  his  feet,  half  dazed, 
and  here  is  his  own  description  of  what  he  did :  first,  he  kicked 
his  right  leg,  and  said  to  himself,  "That  isn't  broken/*  Then  he 
kicked  his  left  leg,  and  said,  "That  is  all  right.  I  can  still  walk." 
Then  there  was  only  one  titling  to  be  determined.  He  made  a 
swing  with  his  right  arm,  and  found  that  it  worked,  and  he  said 
to  himself,  "O.  K.  I  will  still  be  able  to  play  golf!" 


REEL  NINE 
THE  VULTURES 

WILLIAM  FOX  was  carried  to  the  hospital  and  had  the 
gash  in  the  top  of  his  head  sewed  up.  He  had  lost  about 
one-third  of  the  blood  in  his  body,  and  had  to  have  transfusions. 
After  ten  days  he  was  taken  to  his  country  home  at  Woodmere, 
on  Long  Island  Sound,  and  there  he  stayed  for  three  months, 
recovering  his  strength. 

And  while  he  is  recovering,  let  us  make  ourselves  familiar 
with  some  of  the  complications  of  this  story  which  have  so  far 
been  passed  over.  It  seemed  wise  to  give  first  the  main  outlines ; 
but  if  you  are  to  understand  everything  that  follows,  you  have 
to  be  introduced  in  turn  to  a  number  of  persons  who  play  parts 
in  the  drama.  Some  of  them  are  friends  of  the  Fox,  some  of 
them  are  his  enemies,  and  some  are  persons  who  pretend  to  be 
friends,  but  prove  themselves  to  be  enemies.  We  shall  have  to 
go  back  again  and  again,  and  see  how  each  of  these  persons  came 
into  the  life  of  our  subject. 

Let  us  take  first  the  great  investment  firm  of  Halsey,  Stuart 
&  Co.,  of  Chicago  and  New  York.  Harold  Leonard  Stuart,  head 
of  this  firm,  was  a  power  in  the  financial  affairs  of  Chicago, 
having  handled  most  of  the  business  of  the  Insull  light  and  power 
interests;  I  am  assured  that  during  the  past  ten  years  this  firm 
has  marketed  not  less  than  $5,000,000,000  worth  of  securities  to 
the  American  public.  Stuart  is  the  gentleman  of  whom  we  have 
learned  that  he  invariably  wears  a  carnation  in  his  buttonhole 
when  he  attends  the  directors*  meetings  of  corporations.  He 
dresses  to  match  this  carnation;  always  perfectly  groomed  and 
impeccable,  clean  shaven  and  almost  snow  white.  When  he  is 
entertaining  a  customer  whose  bonds  he  expects  to  handle,  he  is 
the  incarnation  of  goodness.  If,  after  thinking  the  matter  over, 
he  should  decide  not  to  handle  the  bonds,  he  can  act  next  day, 

94 


THE  VULTURES  95 

without  the  slightest  difficulty,  the  part  of  the  meanest  man  on 
earth.  He  has  a  younger  brother,  Charlie,  and  both  of  them  are 
bachelors.  When  there  is  a  disagreeable  message  to  be  delivered 
from  the  firm,  it  is  always  Harry  who  does  it,  since  Charlie  does 
not  know  how  to  deliver  such  messages. 

This  firm  took  up  the  handling  of  the  Fox  financing.  W.  F. 
relied  upon  them  completely,  because  he  himself  is  not  a  financial 
man,  nor  did  any  of  his  directors  have  these  qualifications;  they 
were  executives,  whose  business  it  was  to  make  moving  pictures 
and  market  them. 

Afterwards,  when  the  disagreement  occurred,  the  firm  of 
Halsey,  Stuart  &  Co.  issued  to  the  stockholders  of  the  Fox  com- 
panies, March  24,  1930,  an  open  letter,  in  the  course  of  which  a 
statement  was  made,  "Up  to  this  date  (autumn  of  1928)  this 
firm  had  furnished  financing  to  the  Fox  companies  in  the  aggre- 
gate amount  of  $23,150,000,  with  little  profit  on  these  transac- 
tions." Of  course,  the  phrase  "little  profit"  Is  one  about  which 
there  can  be  dispute.  All  I  can  do  is  to  tell  you  how  much  profit 
they  made,  and  let  you  judge  for  yourself  whether  it  is  "little"  or 
enough.  The  bonds  sold  were  all  first  mortgage  bonds,  issued  to 
cover  the  purchase  or  building  of  theatres,  and  they  were  all 
overwhelmingly  secured.  The  bonds  were  sold  over  the  course 
of  a  little  more  than  two  years,  and  of  the  total  price  of  $23,150,- 
000,  Halsey,  Stuart  &  Co.  kept  $3,396,500. 

This  "little"  being  insufficient,  Halsey,  Stuart  made  a  demand 
upon  W.  F.  that  he  allow  them  an  additional  profit  of  $1,000,000 
upon  these  transactions.  They  made  this  demand  in  a  peculiar 
way — they  asked  W.  F.  to  write  them  a  letter,  and  they  them- 
selves drafted  this  letter.  It  was  really  additional  commission 
on  the  last  sale,  of  $13,000,000  worth  of  bonds,  but  they  asked 
to  have  it  granted,  not  as  a  commisison  on  these  bonds,  but  for 
financial  advice  in  previous  transactions.  The  reason  was  that  if 
the  million  were  a  commission  on  the  last  sale  of  bonds,  it  would 
have  to  be  divided  among  a  syndicate  which  had  participated  in 
this  sale ;  but  by  having  the  million  given  for  previous  "financial 
advice,"  Halsey,  Stuart  &  Co.  were  able  to  keep  the  entire  million 
for  themselves.  W.  F.  assented  to  this  arrangement,  and  signed 
the  letter  as  requested. 

Then  came  the  purchase  of  the  Loew  shares.    For  this  deal 


96       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Halsey,  Stuart  loaned  $12,000,000,  and  charged  a  discount  of 
2y2  per  cent,  plus  interest  of  6  per  cent,  so  that  the  money  was 
supplied  at  the  cost  of  8%  per  cent  for  one  year.  In  their  state- 
ment to  the  Fox  stockholders,  they  stated  that  this  was  really  a 
$10,000,000  loan,  and  that  the  $2,000,000  was  to  retire  "some 
other  obligations  of  the  company."  This  statement  gives  a  fair 
idea  of  their  frankness.  What  had  happened  was  that  they  had 
purchased  in  the  open  market  some  of  those  same  bonds  of  the 
Fox  companies  which  they  had  sold  to  the  public,  and  they  now 
demanded  that  W.  F.  borrow  $2,000,000  from  them  at  8%  per 
cent  per  year,  and  use  the  $2,000,000  to  take  back  these  bonds ! 
The  other  $10,000,000  loan  was  covered  by  one  year  gold  notes 
which  they  sold  to  the  public. 

Even  so,  W.  F.  thought  that  the  genial  and  bluff  Harry  Stuart 
was  his  friend.  They  played  golf  together,  and  in  the  course  of 
this  golfing,  W.  F.  made  suggestions  as  to  how  Stuart  might  make 
more  money,  and  these  suggestions  Stuart  was  glad  to  accept. 
W.  F.  called  his  attention  to  the  fact  that  all  the  other  bankers 
were  creating  investment  trusts,  and  thus  adding  enormously  to 
their  resources.  Why  shouldn't  Halsey,  Stuart  do  that?  W.  F. 
urged  this  at  several  conferences,  and  finally  Stuart  followed  this 
advice,  and  created  an  investment  trust,  and  its  capital  grew  to 
$75,000,000.  When  I  add  that  it  is  now  worth  approximately 
$1,000,000,  you  can  realize  how  the  face  of  the  world  has  altered 
in  four  years! 

Including  all  the  theatres  he  had  built  and  the  chains  and 
companies  he  had  bought,  W.  F.  had  obtained  in  the  investment 
market  something  over  $135,000,000  in  four  years.  He  says : 

"There  wasn't  the  slightest  difficulty  in  borrowing  this  money 
— the  credit  of  the  company  was  of  the  highest  class.  Bankers 
were  eager  and  seeking  the  privilege  of  underwriting  or  loaning 
money  to  either  or  both  of  these  companies.  There  was  a  ready 
market  for  all  of  the  securities  offered,  and  each  time  the  offer 
was  oversubscribed.  Again  and  again  Halsey,  Stuart  would 
issue  booklets,  pamphlets,  circulars  and  letters  in,  which  they 
would  describe  these  great  Fox  enterprises.  Again  and  again 
in  their  literature  from  time  to  time  they  would  advise  the  pur- 
chase of  these  securities,  and  tell  of  the  ability  of  William  Fox; 
all  of  this  they  did  after  an  exhaustive  and  careful  investigation 


THE  VULTURES  97 

of  both  these  companies,  as  well  as  of  myself.  Several  times 
during  our  negotiations  they  would  make  private  loans  to  the 
companies,  of  sums  ranging  from  $400,000  to  several  million 
dollars,  as  a  result  of  their  belief  in  these  companies  and  their 
confidence  in  me/' 

An  idea  occurred  to  me  while  listening  to  this  recital.  I 
noticed  that  all  the  other  Jewish  picture  men  dealt  with  bankers 
of  their  own  race.  Warner  Bros,  had  Goldman,  Sachs,  Para- 
mount had  Kuhn,  Loeb,  and  Universal  had  S.  W.  Straus — all 
good  Hebrew  names.  Only  William  Fox  ventured  to  deal  with 
haughty  Anglo-Saxons  such  as  the  Stuarts,  and  Hayden,  Stone 
&  Co.  and  the  Telephone  Company,  represented  by  Walter  S. 
Giiford,  and  by  John  E.  Otter  son,  late  of  the  United  States  Navy. 
Soon  we  shall  see  him  trying  to  deal  with  Elisha  Walker  of 
Bancamerka-Blair,  and  even  with  the  great  Albert  H.  Wiggin 
of  the  Chase  National  Bank — and  making  matters  worse  by 
adding  an.  "s"  to  the  name  of  the  great  Mr.  Wiggin,  which,  I  am 
told,  is  the  most  direct  and  immediate  way  to  incur  that  gentle- 
man's direct  and  immediate  hostility.  I  have  carbon  copies  of 
some  letters  which  W.  F.  wrote  to  "Mr.  Wiggins,"  asking,  for 
help,  and  I  could  have  told  him  the  answers  to  those  letters  before 
he  sent  them. 

I  asked  W.  F.  what  he  thought  about  the  possibility  of  an 
anti-Semitic  factor  in  his  troubles.  He  said  it  might  have  been ; 
Mrs.  Fox  was  quite  sure  that  it  had  been,  and  Benjamin  Reass 
said  he  had  heard  talk  about  it  Very  certainly  we  can  be  sure 
that  it  played  a  part  when  W.  F.  appealed  for  help  to  Henry  Ford. 

Oddly  enough,  W.  F.  still  cherishes  a  weakness  for  the  genial 
and  bluff  Harry  Stuart.  It  seems  hard  for  him  to  go  on  believing 
evil  of  anyone  with  whom  he  has  played  golf.  He  thinks  that 
Stuart  was  led  to  plot  his  downfall  by  the  more  powerful  Tele- 
phone Company,  and  he  cherishes  a  remark  which  some  mutual 
friend  brought  him — Stuart  said  to  this  friend  that  if  he  had 
known  how  matters  were  going  to  turn  out,  he  would  never  have 
helped  to  oust  Fox. 

For  my  part,  I  do  not  play  golf,  and  feel  no  aff ection  ^  f or 
investment  bankers  who  helped  to  unload  upon  the  American 
public  the  enormous  pyramid  of  water  and  wind  known  as  the 
Instill  securities,  It  so  happens  that  I  have  another  check-up  on 


98       UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Halsey,  Stuart  &  Co. ;  I  find  them  in  the  Congressional  Record, 
Vol.  74,  No.  58,  recording  the  proceedings  of  the  United  States 
Senate  for  Saturday,  February  21,  1931.  It  appears  that  a  Senate 
committee  had  been  investigating  stock  swindling  in  the  District 
of  Columbia,  and  proposed  a  "blue  sky"  law  to  put  a  stop  to  the 
evils.  Senator  Elaine  of  Wisconsin  reported  to  the  Senate  die 
result  of  an  investigation  of  the  Wardman  Company,  a  concern 
which  dealt  in  real  estate,  and  had  issued  6%  per  cent  gold 
debentures  and  had  them  put  upon  the  market  by  Halsey,  Stuart 
&  Co.  These  bonds  had  turned  out  to  be  worthless,  and  Senator 
Elaine  stated: 

"Halsey,  Stuart  &  Co.  knew  at  the  time  they  were  financing 
this  new  arrangement  that  the  Wardman  properties  had  not  been 
paying  carrying  charges.  They  knew  that  that  organization  was 
bound  to  fail.  They  could  not  help  but  know  it.  Yet  they  made 
representations  to  the  public  that  these  bonds  and  securities  were 
gilt-edge,  the  very  finest  character  of  investment." 

It  appears  that  Halsey,  Stuart  &  Co.  had  quoted  an  "inde- 
pendent engineer"  as  valuing  the  properties  at  more  than 
$31,000,000,  They  had  put  $24,000,000  worth  of  liability  against 
the  properties,  and  It  turned  out  that  their  true  value  was  $17,- 
147,000,  and  Halsey,  Stuart  admitted  that  the  Wardman  bonds 
"have  practically  no  market  value  at  all  at  this  time."  Said 
Senator  Elaine:  "We  enact  laws  to  punish  the  man  who  jimmies 
the  safe.  We  punish  men  for  highway  robbery.  We  punish  men 
for  forgery,  and  they  must  submit  to  imprisonment.  Yet  in  the 
field  of  investment,  we  let  the  perpetrators  of  fraud  go  scot-free." 

Also  he  said :  "Halsey,  Stuart  &  Co.  cannot  complain  at  the 
disclosure  of  these  facts.  Halsey,  Stuart  &  Co.  were  apprised 
that  the  subcommittee  would  hold  a  hearing  on  a  certain  day  at 
a  certain  time,  at  which  they  would  be  afforded  every  opportunity 
to  appear  and  present  their  side  of  the  matter.  They  failed  to 
appear,  and  upon  the  record  in  this  case  that  one  investment 
company  alone  stands  convicted  as  one  of  the  greatest  vultures 
in  the  investment  field." 

That  seems  to  me  to  cover  the  case ;  but  I  cannot  resist  the 
impulse  to  add  one  item  more.  It  seems  that  Halsey,  Stuart  & 
Co.  has  a  radio  hour  over  the  coast-to-coast  network  of  the 
National  Broadcasting  Company  and  associated  stations.  They 


THE  VULTURES  99 

have  a  famous  radio  person  known  as  the  "Old  Counsellor/'  who 
tells  the  widows  and  orphans  to  buy  the  securities  put  out  by 
them.  For  their  program  for  February  11,  1931,  they  had  as 
"guest  speaker"  none  other  than  Martin  J.  Insull,  president  of 
the  Middle  West  Utilities  Company.  Subsequently  Halsey,  Stuart 
&  Co.  printed  this  masterpiece  of  eloquence  in  pamphlet  form, 
and  a  copy  was  sent  to  every  United  States  Senator.  The  title 
of  the  address  was  "The  Power  Trust,"  and  the  purport  of  it  was, 
of  course,  that  there  was  no  such  thing.  The  people  who  had 
bought  from  Halsey,  Stuart  &  Co.  securities  costing  $5,000,000,- 
000  and  had  seen  them  drop  to  less  than  one  billion,  listened 
gratefully  to  Mr.  Insult's  wisdom,  and  were  glad  to  know  that 
everything  was  perfect  in  America. 

So  now  we  know  the  immaculate  financial  gentleman  from 
Chicago  who  comes  to  directors'  meetings  with  a  carnation  in  his 
buttonhole.  Next  we  have  to  know  one  of  his  associates,  another 
great  Chicago  financier,  Harley  L.  Clarke,  president  of  the  Util- 
ities Power  &  Light  Corporation,  and  of  so  many  other  utility 
corporations  that  it  would  be  a  bore  to  list  them.  Clarke  plays  a 
vital  part  in  this  story,  and  now  is  the  time  to  make  his  acquaint- 
ance. 

He  had  come  to  W.  F.'s  office  a  couple  of  years  back,  bringing 
a  letter  of  introduction  from  Harry  Stuart.  It  was  a  cordial 
letter,  saying  that  Stuart  would  be  grateful  for  any  favors  shown 
to  Clarke.  W.  F.  listened,  and  learned  that  by  accident  Clarke 
had  taken  on  a  side  line  which  concerned  the  motion  picture 
business;  he  had  got  mixed  up  in  the  International  Projector 
Company,  and  had  merged  a  lot  of  companies  together,  and  now 
was  making  85  per  cent  of  all  projection  machines  used  in  Amer- 
ica. He  had  just  created  a  company  called  the  National  Theatres 
Supplies,  and  as  the  Fox  enterprises  were  his  customers,  he 
wished  to  get  more  of  their  business. 

A  day  or  two  later,  Stuart  sent  for  W.  F.  Said  he :  "I  am 
sorry  you  saw  Clarke  before  I  got  to  you.  You  know,  we  both 
live  in  the  same  city,  and  when  he  asked  me  for  this  letter  of 
introduction  I  couldn't  say  no.  I  want  you  to  watch  yourself  in 
your  dealings  with  him — don't  trust  him  further  than  you  can 
see.  He  will  make  every  kind  of  promise  and  do  nothing,  so 
watch  your  step."  Says  W.  F. :  "I  explained  to  Stuart  that  all 


100     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Clarke  had  talked  about  was  selling  our  enterprises  materials, 
and  that  we  were  now  buying  those  materials,  and  was  there  any 
reason  why  he  didn't  want  me  to  serve  him  in  that  respect? 
Stuart  said  that  was  all  right,  but  if  he  knew  that  bird,  he  would 
want  more  than  that  before  long." 

It  turned  out  as  Stuart  had  said — the  "bird'*  wanted  very 
much  more.  Presently  W.  F.  was  engaged  in  making  an  experi- 
mental projection  machine  for  the  wide  screen,  and  then  Clarke 
wanted  to  go  in  on  this  enterprise.  Said  he :  "I  am  in  a  rather 
peculiar  way.  Our  business  is  building  projection  machines,  and 
if  you  are  going  to  turn  the  style  from  normal  size  to  grandeur 
size,  we  are  out  of  business.  I  see  the  great  possibilities — I  would 
like  to  do  this  jointly  with  you.  We  have  done  a  lot  of  experi- 
menting of  our  own  on  a  wide  projection  machine.  We  have 
invested  considerable  money."  That  resulted  in  the  forming  of 
a  corporation  known  as  the  Grandeur  Company,  Clarke's  com- 
pany owning  50  per  cent  and  Fox  owning  the  other  50  per  cent. 

W.  F.  had  decided  that  he  wanted  to  make  his  own  projection 
machines,  and  he  bought  the  Mitchell  Camera  Co.  of  Los  Angeles, 
This  concern  was  now  taken  into  the  Grandeur  Company,  and 
there  was  organized  the  General  Theatres  Equipment  Company, 
with  W.  F.  talcing  25,000  shares  of  stock  for  the  capital  he  had 
invested  in  Mitchell  and  Grandeur.  So  now  he  was  on  intimate 
terms  with  Harley  L.  Clarke,  and  at  the  same  time  wondering 
why  a  public  utilities  magnate  should  be  fooling  with  pictures. 

Soon  after  W,  F.'s  accident,  Clarke  came  to  his  home  with 
a  new  proposition.  He  wanted  to  buy  W.  F.'s  voting  shares  in 
Fox  Film  and  Fox  Theatres.  At  any  rate  he  wanted  to  buy  a 
half  interest  in  them.  Says  W.  F. :  "I  said  I  was  not  desirous  of 
selling  a  half  interest  in  them.  I  asked  him  of  what  interest  they 
could  be  to  hixn.  He  said:  T  have  a  vision  beyond  yours — I 
believe  that  this  is  a  time  I  could  buy  out  the  Paramount  Com- 
pany and  others,  and  I  would  like  to  merge  them  all  together/ 
I  said  he  couldn't  do  that,  because  I  was  having  trouble  merging 
two  of  them  now.  He  said  perhaps  he  had  a  way  without  my 
knowing  it,  because  in  his  employ  there  were  sons  of  two  of  the 
U.  S.  Senators.  Of  course  I  was  not  interested  in  the  proposal 
he  was  making.  He  said  that  that  was  wholly  insignificant,  what 
he  really  wanted  to  say  was  that  he  wanted  to  be  of  service  to 


THE  VULTURES  F01 

me  from  time  to  time.  'Any  time  you  find  yourself  in  a  jam  at 
all  don't  you  be  afraid  to  come  to  me  and  I  will  be  glad  to  loan 
you  money/  " 

So  now  you  see,  W.  R  has  many  powerful  friends.  He  has 
the  Telephone  Company,  which  has  loaned  him  $15,000,000  and 
caused  a  bank  to  lend  him  $3,000,000  more.  He  has  the  powerful 
Harry  L.  Stuart,  head  of  the  second  or  third  largest  investment 
banking  house  in  America,  preparing  a  plan  for  the  refinancing 
of  all  his  $93,000,000  worth  of  loans.  And  now  here  is  the  great 
Mr.  Clarke,  partner  with  W.  F.  in  a  big  enterprise,  and  offering 
to  help  him  out  if  at  any  time  he  gets  into  a  jam. 
-""Of  course,  all  these  powerful  persons  want  something  in 
return.  The  Telephone  Company  wants  some  patents  which 
W.  F.  owns,  and  about  which  you  are  next  to  be  told.  Harley 
L.  Clarke  wants  W.  F/s  voting  shares,  because  he  has  a  dream 
of  merging  all  the  picture  companies,  and  taking  the  place  of 
William  Fox.  What  Harry  Stuart  wants  is  not  yet  clear,  but  no 
doubt  he  will  reveal  it  when  he  presents  his  plan  for  the  $93,000,- 
000  worth  of  new  financing. 


REEL  TEN 
THE  OCTOPUS 

THERE  is  one  more  of  the  powerful  friends  of  William  Fox 
to  be  told  about;  one  of  the  mightiest  powers  in  our  busi- 
ness affairs,  the  American  Telephone  &  Telegraph  Corpp^ny,  or 
«^r^^w^^r^^^  worth  oJ 

-of  surplus*  which  it  can  w*e  in  an 
,  of  ways  to  "rig"  the  market  M 


itself  and  its  officials.  You  may  be'puzzted  ^"td'^st'i^ralr'  a 
telepliohe  Company  wotild  be  doing  in  the  moving  picture  busi- 
ness, and  why  it  should  be  setting  out  to  destroy  a  moving  picture 
producer.  If  you  ask  that,  you  will  be  showing  yourself  unfa- 
miliar with  the  internal  anatomy  of  the  American  Octopus,  which 
has  a  powerful  digestion,  and  can  assimilate  the  most  diverse 
kinds  of  food. 

William  Fox  strenuously  insists  that  public  service  corpora- 
tions, occupying  a  special  position  and  enjoying  special  privileges 
from  the  Government,  should  not  be  permitted  to  enter  into  other 
businesses  and  to  compete  with  private  individuals.  He  points 
out  that  the  Telephone  Company  is  permitted  by  law  to  come  onto 
your  property  and  claim  rights-of-way.  It  can  set  up  telephone 
poles  in  front  of  your  home,  and  string  its  lines  across  your 
property.  More  than  that,  it  is  in  a  position  where  it  can,  if  it 
wishes,  listen  in  on  your  private  conversation  and  learn  your 
business  secrets.  He  claims  that  it  does  frequently  wish  to. 

The  Telephone  Company  manufactures  its  own  instruments 
and  rents  them  to  you  at  an  enormously  high  profit.  For  this 
purpose,  it  has  a  subsidiary,  98  per  cent  owned,  called  the  Western 
Electric  Company  ;  and  when  talking  pictures  came  into  the  mar- 
ket, the  Western  Electric  Company  began  manufacturing  talking 
picture  equipment  for  theatres.  That  seemed  logical,  since  the 
process  is  an  electrical  one,  and  since  the  sound  reproducing  appa- 

102 


THE  OCTOPUS  103 

ratus  is  a  kind  of  telephone.  Since  the  Fox  companies  owned 
many  theatres,  and  were  among  the  pioneers  in  equipping  these 
theatres  with  sound  apparatus,  it  came  about  that  W.  F.  was  a 
highly  valued  customer  of  this  Telephone  Company's  subsidiary. 
Since  he  was  friendly  and  agreeable  about  giving  up  some  of  his 
rights  when  he  was  ordered  to  do  so,  he  was  favored  by  the 
Telephone  Company  in  many  ways.  Since  Warner  Brothers,  on 
the  contrary,  were  stubborn  in  standing  up  for  their  rights,  there 
was  bitter  enmity  between  the  Warners  and  the  Telephone 
Company,  and  a  dispute  was  and  still  is  in  arbitration. 

There  was  a  tangle  of  patent  rights  for  the  "talkies,"  and  a 
vast  amount  of  research  to  be  done  to  improve  the  process. 
Accordingly  there  was  established  a  concern  called  Electrical 
Research  Products,  Inc.,  a  wholly  owned  subsidiary  of  the 
Western  Electric  Company.  The  president  of  this  concern  is 
John  E.  Otterson,  and  it  was  with  him  that  W.  F.  dealt  in  all 
the  negotiations  concerning  patent  rights.  Since  W.  F.  owned 
some  patents  which  the  Telephone  Company  had  failed 
to  obtain  and  later  desperately  needed,  John  E.  Otterson  was 
extremely  obliging  to  W.  F.,  and  when  there  was  a  question 
whether  the  Warner  interests  or  the  Fox  interests  should  pur- 
chase the  Loew  shares,  the  Telephone  Company  assisted  Fox. 

This  matter  carries  us  back  to  the  question  of  "sound  on  disc'* 
or  "sound  on  film/'  Some  talking  pictures  with  the  device  of 
the  phonograph  disc  had  been  shown  in  the  United  States  as 
early  as  1905,  but  as  they  depended  upon  the  tin  horn,  of  course 
they  were  terrible.  But  then  came  the  "orthophonic"  method,  and 
the  Telephone  Company  was  convinced  that  they  had  real  talking 
pictures  by  this  method,  and  in  1926  and  1927  their  representa- 
tives were  visiting  all  the  motion  picture  producers  and  heads  of 
theatre  chains,  seeking  to  convince  them  that  talking  pictures 
were  here,  and  that  sound  on  disc  was  the  proper  method. 

The  Warners  took  up  the  project  and  staked  their  future 
upon  it.  At  that  time  their  550,000  shares  of  stock  were  worth 
only  $8  a  share  in  the  market  and  they  were  running  con- 
tinuously in  the  red.  At  the  instance  of  the  Telephone  Company 
they  created  a  concern  called  "Vitaphone,"  and  Warner  Brothers 
presented  the  first  "Vitaphone"  pictures,  and  they  raised  new 
capital  and  went  in  for  this  process  on  a  large  scale.  The  trouble 


104     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

was  that  the  equipment  to  show  these  pictures  was  very  expen- 
sive, about  $20,000  per  theatre,  and  there  were  only  about  100 
theatres  equipped  for  the  process.  The  Telephone  Company  had 
a  wonderful  vision  of  what  would  happen  if  the  20,000  theatres 
of  the  United  States  could  be  persuaded  to  install  their  $20,000 
equipment.  Since  the  profits  were  enormous,  it  would  have  added 
$100,000,000  or  $200,000,000  to  the  surplus  of  the  Octopus. 

Up  to  that  time  the  motion  picture  industry  had  invested 
the  sum  of  $1,100,000,000  in  silent  pictures.  Most  of  this  value 
had  already  been  written  off,  but  there  was  still  estimated  to 
be  something  like  $100,000,000  of  value  left  in  the  existing  stock 
of  negatives.  If  talking  pictures  really  won  out,  the  public  would 
no  longer  pay  to  see  silent  pictures,  and  that  remaining 
$100,000,000  worth  of  film  would  become  so  much  junk.  Every- 
body was  in  a  panic,  and  everybody  had  to  decide  all  at  once. 
The  producers  who  were  turning  out  silent  pictures  faced  the 
prospect  of  having  them  become  junk  before  they  were  finished. 
But,  on  the  other  hand,  if  they  installed  new  sound  stages  and 
made  "talkies/'  where  would  they  find  theatres  equipped  to  show 
these  talkies?  And  suppose,  after  the  work  was  done,  they 
should  find  that  they  had  used  the  wrong  process  ? 

The  Fox  companies  were  standing  out  for  sound  on  film,  and 
refusing  to  have  anything  to  do  with  discs.  When  the  repre- 
sentatives of  the  Telephone  Company  came  to  W.  F.,  he  told 
them  his  one  hundred  and  one  reasons  why  sound  on  disc  was 
wrong.  He  told  them  that  he  was  experimenting  with  sound  on 
film ;  and  since  they  claimed  to  own  all  the  patents,  they  were 
naturally  interested. 

W.  F.  had  bought  the  Case  patents,  as  we  have  seen,  and 
also  he  had  bought  the  patents  for  a  German  process  called  the 
"Tri-Ergon";  but  he  wasn't  sure  just  how  valid  these  patents 
were — nobody  could  be  sure,  because  it  was  a  new  field,  and 
there  were  tangled  claims.  The  Radio  Corporation  of  America, 
another  great  octopus,  also  claimed  to  own  everything.  Radio 
and  Telephone  made  a  deal,  dividing  the  field  SO  per  cent 
between  them.  While  they  stood  together  against  all  comers, 
what  chance  did  a  little  fellow  like  W.  F.  have?  He  decided 
to  play  safe,  and  keep  cm  friendly  terms  with  this  mighty  com- 
bination. 


THE  OCTOPUS  105 

So  the  Fox  companies  made  a  deal  with  the  Telephone 
Company,  whereby  the  latter  got  the  benefit  of  six  million  dollars 
which  Fox  had  spent  in  investigating  and  perfecting  the  process 
of  sound  on  film.  The  Fox  companies  were  to  be  licensed  to 
make  moving  pictures  for  theatres  on  the  same  terms  as  all  the 
other  producers,  but  Fox  was  to  receive  the  exclusive  right  to 
make  sound  newsreels.  The  Fox  Movietone  News  was  develop- 
ing to  enormous  proportions,  and  all  through  these  complicated 
negotiations,  W.  F.  was  told  that  his  reward  for  developing 
sound  on  film  and  turning  it  over  to  the  Telephone  Company 
was  to  be  that  he  was  to  have  the  exclusive  newsreel  license. 

Also  it  was  provided  in  the  agreement  that  the  Fox  companies 
were  to  receive  an  exclusive  license  for  five  years  to  develop 
sound  pictures  for  the  educational,  industrial,  religious  and  scien- 
tific fields.  W.  F.  was  holding  onto  that  dream  of  putting  sound 
apparatus  into  every  church,  and  having  all  the  congregations  of 
America  listen  to  the  twelve  most  "inspirational"  preachers.  He 
was  going  to  put  a  sound  apparatus  in  every  classroom  in  Amer- 
ica, and  have  the  children  listen  to  a  few  best  teachers.  Now  the 
Telephone  Company  graciously  condescended  to  say  that  he 
might  have  a  chance  for  five  years  to  develop  these  rights.  They 
told  him  this  again  and  again  in  the  presence  of  his  lawyers  and 
others.  As  W.  F.  tells  the  story,  they  said:  "There  will  be  ho 
other  licenses.  That  promise  we  are  going  to  carry  out.  When 
you  are  ready  to  exercise  that  right,  we  will  give  you  the  proper 
papers."  But  W.  F.  adds,  "Although  we  asked  for  those  papers 
every  time  we  saw  representatives  of  the  Telephone  Company, 
we  never  got  those  papers." 

The  Telephone  Company  sent  their  best  experts  to  the  labora- 
tories of  William  Fox,  and  got  everything  that  he  had  got  out 
of  $6,000,000  worth  of  experiments.  All  those  Case  inventions 
that  we  have  read  about,  the  canary  bird  singing  and  the  China- 
man playing  the  ukelele,  they  got  all  that.  They  assured  him 
most  solemnly  that  the  Case  patents  and  the  Tri-Ergon  patents 
were  utterly  worthless,  but  still  they  had  to  admit  that  the  Case 
people  and  the  Fox  people  had  really  made  sound  on  film,  and 
the  Telephone  people  now  learned  to  make  the  apparatus  for 
Fox,  and  for  the  Fox  theatres  and  all  the  other  theatres  of  the 
world.  They  had  given  a  license  to  the  Warners,  whereby  the 


106     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Warners  could  have  this  same  apparatus,  and  they  now  proceeded 
to  give  licenses  for  the  same  apparatus  to  all  the  other  picture 
concerns;  in. return  they  promised  Fox  the  non-theatrical  field, 
and  also  promised  him  the  exclusive  newsreel  field. 

But  sound  newsreels  were  in  enormous  demand,  and  the  other 
companies  wanted  to  make  them,  and  presently  they  were  making 
them,  and  W.  F.  learned  that  they  had  licenses  from  the  Tele- 
phone Company. 

"I  was  then  told  that  the  Telephone  Company  had  recon- 
sidered the  promises  made  to  the  Fox  companies,  and  found  that 
they  couldn't  be  carried  out,  because  it  wouldn't  be  proper  for 
the  Telephone  Company  to  show  preference ;  but  that  they  would 
in  the  near  future  find  a  way  of  compensating  the  Fox  com- 
panies for  the  time,  effort,  money  and  energy  that  was  expended. 
Of  course,  it  is  clear  that  that  was  not  the  reason  they  were 
going  to  violate  the  promises  to  us.  The  reason  was  because  the 
other  producers  were  able  to  receive  a  license  from  the  Radio 
Company,  which  had  the  identical  system  as  the  Telephone  Com- 
pany, and  had  a  half  interest  in  these  patents;  so  that  when 
the  Telephone  Company  began  competing  for  these  producers  to 
become  their  licensees,  they  had  to  give  them  that  which  the 
Radio  Company  was  willing  to  give  them.  It  is  clear,  therefore, 
that  their  promises  were  to  be  broken,  not  because  they  wanted 
their  licensees  to  be  on  an  equal  basis,  but  because  they  found 
their  competition  with  the  Radio  Company  compelled  them  to 
do  so.  The  only  way  they  could  have  carried  out  their  promises 
to  the  Fox  Company  was  to  buy  back  from  the  Radio  Company 
the  50  per  cent  of  their  rights." 

W.  F.  was  going  ahead  making  pictures  of  surgical  operations 
to  be  used  in  medical  schools,  and  he  was  making  educational 
pictures  to  be  used  in  the  public  schools.  But  he  saw  that  he 
was  going  to  lose  these  exclusive  rights  also — because  the  Radio 
Company  would  give  what  the  Telephone  Company  didn't  give. 
Here  was  a  pretty  tangle  of  interests,  and  a  series  of  lawsuits 
which  would  have  kept  several  firms  of  Wall  Street  attorneys 
"on  velvet"  for  the  next  ten  years. 

But  it  happened  that  this  was  the  time,  February,  1929,  when 
W.  F.  had  to  give  his  final  decision  to  Schenck;  that  Tuesday 
when  he  had  to  plank  down  a  certified  check  for  $50,000,000 


THE  OCTOPUS  107 

for  the  Loew  shares,  or  else  see  them  go  to  the  Warners.  He 
had  been  to  the  Telephone  Company  about  it,  and  a  deal  had 
been  argued  back  and  forth,  and  the  Telephone  Company  had 
offered  to  lend  $15,000,000  for  a  year,  provided  that  W.  F. 
would  agree  to  write  a  letter,  finally  waiving  any  and  all  claims 
that  the  Fox  companies  had  against  the  Telephone  Company 
against  any  promises  made  from  the  beginning  of  the  negotia- 
tions up  to  the  time  of  the  loan.  W.  F.  had  to  choose  between 
a  ten-year  lawsuit,  and  the  chance  to  take  over  the  Loew  theatres 
and  Metro-Goldwyn-Mayer. 

There  was  another  claim  which  the  Telephone  Company 
wanted  waived.  They  proposed  that  W.  F.  should  surrender  to 
them  the  Tri-Ergon  patents,  letting  them  reimburse  him  for  the 
amount  he  had  invested  in  these  patents.  They  insisted  that  the 
patents  were  no  good,  but  still  they  wanted  them.  W.  F.  replied 
that  these  patents  were  his  property  as  an  individual ;  he  had  no 
desire  to  surrender  them,  and  if  that  was  a  condition  of  the 
loan,  he  didn't  want  the  loan.  If  the  Telephone  Company  wanted 
the  Tri-Ergon  patents,  let  them  make  a  cash  offer  to  W.  F. 

I  must  now  tell  about  these  patents,  which  have  turned  out 
to  be  the  biggest  prize  of  all.  At  the  beginning,  nobody  realized 
their  value,  not  even  their  owner.  They  were  just  a  gamble,  a 
chance  that  he  had  taken.  But  month  by  month  and  year  by 
year  their  importance  began  to  grow,  and  the  Telephone  Company 
began  to  bid,  $5,000,000  cash  in.  April  of  1929,  and  in  July  a 
"feeler"  that  indicated  $10,000,000  or  more. 

The  first  attempts  at  sound  on  film  were  made  with  the 
selenium  cell,  and  this  did  not  work.  The  successful  process  was 
the  photoelectric  cell,  and  the  first  persons  to  use  that  cell  in  the 
reproduction  of  sound  were  three  Germans  named  Engl,  Vogt 
and  Massolle.  They  took  out  their  patent  in  Germany,  March  3, 
1919,  and  made  their  application  in  the  United  States  on  April  4, 
1921.  Under  the  so-called  Nolan  act,  their  title  to  their  patent 
takes  date  from  the  day  of  the  filing  In  Germany.  In  the  year 
1919  the  inventors  of  this  Tri-Ergon  process  gave  private  demon- 
strations in  Germany,  and  in  September  of  1922  they  gave  in 
Berlin  the  first  public  demonstration  in  the  world  of  the  use  of 
the  photoelectric  cell  in  the  making  of  talking  motion  pictures. 
They  brought  their  invention  to  the  United  States,  and  William 


108     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Fox  bought  the  North  American  rights  for  $60,000,  and  estab- 
lished the  American  Tri-Ergon  Company,  himself  owning  90  per 
cent  of  the  stock. 

The  United  States  Patent  Office  refused  to  issue  the  patent 
for  the  photoelectric  cell.  Our  patent  laws  and  practices  have 
many  peculiarities.  A  great  corporation  like  the  Telephone  Com- 
pany can  claim  all  the  patents  in  a  certain  field,  and  denounce 
everybody  else  as  a  "bootlegger,"  and  tie  these  persons  up  in  a 
tangle  of  lawsuits  and  injunctions,  and  go  ahead  and  levy  tribute 
upon  a  whole  industry  to  the  extent  of  tens  and  hundreds  of 
millions  of  dollars.  Then,  after  ten  years  or  so  of  litigation,  it 
will  turn  out  that  the  great  corporation  never  had  any  basis  for 
its  claims;  but  meanwhile  the  little  fellows  will  be  ruined,  and 
perhaps  dead  and  buried. 

The  American  Tri-Ergon  Corporation  brought  proceedings 
against  the  Commissioner  of  Patents  to  compel  him  to  issue  the 
patent.  It  was  not  until  December  9,  1931,  that  this  suit  was 
finally  decided  by  the  Supreme  Court  of  the  District  of  Columbia. 
The  decision  of  Justice  Adkins  appears  to  be  about  as  sweeping 
as  the  English  language  makes  possible.  After  taking  a  whole 
year  to  study  the  case,  the  judge  denies  all  the  other  claims,  and 
states  without  qualification  that  the  plaintiffs  were  the  first  to 
demonstrate  the  photoelecric  cell  in  the  process  of  sound  repro- 
duction. He  says:  "The  claims  here  at  issue  are  directed  to  a 
meritorious  and. novel  invention  which  cannot  be  properly  re- 
jected on  any  of  defendant's  citations,  or  any  combination 
thereof ;  the  claims  are  patentable,  and  on  the  record  before  this 
court  a  patent  thereon  should  be  granted/' 

Still  W.  F.  has  not  got  his  patent.  It  seems  that  the  bureau- 
crats take  their  own  time  in  obeying  the  courts.  There  is  still 
some  investigating  to  be  done.  And  meanwhile,  the  Radio  Cor- 
poration has  played  a  new  trick.  It  has  managed  to  find  another 
man  who  had  some  patent  on  file,  and  it  has  paid  him  $10,000 
for  an  option,  and  again  has  tied  matters  up.  That  is  what 
shrewd  lawyers  are  for;  and  there  is  a  big  stake  in  this  case, 
some  $6,000,000  or  $8,000,000  a  year  which  Radio  and  Telephone 
between  them  are  taking  from  the  American  picture  industry, 
upon  the  basis  of  claims  which  are  now  evidently  baseless. 

I  asked  W.  F.  to  tell  me  something  about  John  Edward 


THE  OCTOPUS  109 

Otterson,  who  had  been  arguing  and  fighting  with  him  over  this 
patent  tangle  for  several  years.  I  found  that  W.  F.  did  not  admire 
Mr.  Otterson  very  ardently.  He  spoke  of  him  as  a  "flag  lieu- 
tenant," and  said  that  he  had  learned  his  manners  while  bossing 
a  gang  of  stokers.  I  asked  if  W.  F.  had  made  sure  that  bossing 
stokers  was  among  the  duties  of  a  flag  lieutenant,  and  our  dis- 
cussion dissolved  in  laughter. 

As  a  matter  of  fact,  Otterson  was  graduated  from  Annapolis 
and  took  a  degree  at  Massachusetts  Tech.  He  was  in  the  navy 
for  fifteen  years,  retiring  as  naval  constructor  with  the  rank  of 
lieutenant.  He  was  president  of  the  Winchester  Arms  Company 
and  the  Simmons  Hardware  Company,  and  is  now  president  of 
the  Western  Electric  Company  of  Argentine,  of  Brazil,  of  Cuba, 
of  Mexico,  of  Switzerland,  of  the  Near  East — all  kinds  of  im- 
pressive posts,  you  see.  But  in  spite  of  it  all,  W.  F.  insists  that 
he  is  very  dumb,  and  that  the  stockholders  of  the  Telephone 
Company  would  be  ill  pleased  with  him  if  they  knew  how  many 
hundreds  of  millions  of  dollars  his  dumbness  has  cost  them. 

Otterson's  portrait,  which  I  have  before  me,  shows  a  long 
nose  and  a  high  forehead,  a  typically  Anglo-Saxon  face;  and  it 
may  be  that  W.  F.  has  anti-Gentile  prejudices.  He  reports 
ex-Lieutenant  Otterson  as  a  heavy-set,  powerful  man  with  a  big 
chin  and  jaw  and  sharp  piercing  eyes,  "When  he. shakes  your 
hand,  you  can  feel  the  muscular  development  throughout  the 
entire  arm,  and  he  makes  sure  to  grasp  you  so  that  you  do  feel 
his  muscular  development.  He  never  allows  you  to  forget  that 
he  is  speaking  for  the  great  and  mighty  Telephone  Company. 
He  is  not  a  man  who  uses  either  tact  or  diplomacy ;  he  does  all 
things  by  brute  force.  He  will  give  you  his  promise  and  word 
of  honor  again  and  again,  and  without  the  wink  of  an  eyelash 
deny  that  he  ever  said  so.  He  is  as  cold  as  ice,  and  feels  that 
because  he  represents  the  Telephone  Company  he  is  privileged 
to  break  his  word  at  will." 

You  see,  W.  F,  had  the  task  of  trying  to  persuade  the  power- 
ful John  Otterson  that  there  really  was  a  great  future  for  talking 
pictures.  Otterson  wouldn't  believe  it,  and  especially  wouldn't 
believe  in  sound  on  film;  when  sound  on  film  came,  as  a  result 
of  the  labors  of  W.  F.,  and  in  spite  of  the  opposition  of  Otter- 
son,  then  Otterson  had  to  come  to  W.  F.'s  laboratories  and  get 


110     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

what  W.  F.  had,  and  make  him  all  sorts  of  promises,  and  then 
repudiate  the  promises. 

Also  he  had  to  do  the  same  \vith  Warner  Brothers.  This 
concern  had  pioneered  in  sound  on  disc,  and  established  the  Vita- 
phone  Company  for  that  purpose,  and  Otterson  had  made  an 
agreement  with  them  whereby  Vitaphone  was  to  charge  all  mov- 
ing picture  companies  8  per  cent  of  their  gross  royalties  on 
sound  pictures;  Vitaphone  was  to  get  three-eighths  of  that 
amount,  and  Otterson  was  to  get  five-eighths.  But  when  Radio 
began  to  compete  with  Telephone  in  granting  these  licenses, 
Otterson  was  in  the  same  predicament  with  Vitaphone  that  he 
had  been  in  with  Fox. 

One  of  the  large  losses  that  the  stockholders  sustained  through 
the  "dumbness*'  of  Otterson  was  when  W.  F.  got  him  the  chance 
to  buy  the  Warners  outright,  and  he  wouldn't  take  it.  This  was 
at  the  beginning  of  the  talking  picture  development,  when  the 
stock  of  Warners  stood  at  $8  a  share  or  less.  W.  F.  was 
asked  to  negotiate,  and  was  authorized  to  offer  the  Warners 
$4,500,000  for  the  entire  company,  lock,  stock  and  barrel.  The 
Warners  were  to  pay  $3,000,000  of  this  for  notes  outstanding, 
and  the  balance  would  be  divided  among  the  four  brothers. 

The  Warners  made  a  counter-proposition:  they  would  take 
$6,500,000,  which  would  give  each  of  the  brothers  nearly 
$1,000,000  apiece.  But  if  they  had  only  a  million  and  a  half  to 
divide  among  the  four,  they  would  consider  themselves  broke,  and 
they  might  as  well  go  on.  Of  course,  the  purpose  of  the  Tele- 
phone Company  in  these  negotiations  was  to  buy  back  the  con- 
tract outstanding  with  Vitaphone;  but  their  estimate  of  the 
future  of  the  "talkies"  was  so  low  that  they  threw  away  a  chance 
to  buy  Warners  for  $6,500,000 — and  two  years  later  the  common 
stock  of  Warners  was  selling  in  the  open  market  for  upwards  of 
$240,000,000,  plus  $50,000,000  for  the  bonds  and  preferred  shares ! 

But  ex-Lieutenant  Otterson' s  masterpiece  of  "dumbness"  was 
in  relation  to  the  Tri-Ergon  patents.  W.  F.  had  bought  the  North 
American  rights  to  these  patents,  and  he  had  an  option  on  the 
rights  for  the  rest  of  the  world  for  $40,000.  Again  and  again 
W.  F.  sought  to  impress  upon  Otterson  the  importance  of  these 
patents.  In  the  year  1928  he  wanted  Otterson  to  buy  the  rights 
for  the  rest  of  the  world,  and  what  he  succeeded  in  bringing 


THE  OCTOPUS  1 1 1 

about  v/as,  not  that  Otterson  bought  these  rights,  but  that  he 
forbade  Fox  to  buy  them !  Says  W.  F. :  "Because  the  man  who 
was  authorized  by  the  Telephone  Company  to  speak  on  this  sub- 
ject had  a  brain  which  was  not  equal  to  grasping  this  picture, 
the  Telephone  Company  has  lost  hundreds  of  millions  of  dollars. 
They  have  already  spent  a  million  or  more  in  litigation  abroad, 
as  a  result  of  not  owning  the  Tri-Ergon  patents  in  Europe,  and 
as  a  result  of  it  they  have  lost  the  entire  European  field/' 

I  expressed  amazement  at  this  story.  I  couldn't  understand 
the  Telephone  Company  forbidding  Fox  to  take  up  an  option 
which  they  didn't  want  themselves.  I  couldn't  understand  what 
right  they  could  have  to  forbid  an  American  citizen  to  make  a 
purchase  if  he  chose  to.  But  W.  F.  explained  that  he  was  just 
a  poor  little  fellow  trying  to  keep  going  in  the  presence  of  the 
great  Octopus,  which  could  have  swallowed  him  in  two  or  three 
bites.  Said  the  Otter  son-Octopus,  addressing  the  Fox:  "We 
don't  want  you  to  exercise  this  option.  It  is  of  no  value  to  you 
or  to  anybody.  It  is  no  good.  You  have  made  a  bad  investment 
here.  If  you  exercise  this  option,  we  shall  consider  it  an  act 
of  unfriendliness,  because  you  don't  intend  to  become  either  a 
licensor  or  manufacturer  of  equipment;  that  is  not  your 
function/' 

W.  F.  explained  to  me  what  had  been  his  point  of  view  at 
the  time:  that  maybe  the  Tri-Ergon  patents  were  no  good,  and 
if  so,  he  had  to  have  a  license  to  produce  talking  pictures,  and 
if  he  quarreled  with  Otterson,  Otterson  might  deny  him  a  license. 
It  appears  that  the  owner  of  a  patent  is  not  a  common  carrier, 
or  anything  of  that  sort ;  he  can  sell  or  he  can  refuse  to  sell  at 
his  sovereign  pleasure.  I  suggested  that  W.  F.  might  have  exer- 
cised his  option  on  the  world  rights  of  Tri-Ergon  through  a  third 
party,  without  letting  the  Telephone  Company  know  about  it. 
The  somewhat  proud  answer  was  as  follows : 

"William  Fox  has  made  a  habit  all  his  life  in  his  business 
career,  which  was  always  a  fearless  one,  to  do  everything  in  the 
open.  His  practice  has  been  during  his  entire  business  career 
that  once  he  stated  he  would  not  do  that  thing,  then  a  thought 
to  do  it  through  a  subterfuge  or  through  someone  else  never 
entered  his  mind.  It  was  possible  for  me  to  have  a  substitute 
in  my  place  exercise  that  option,  but  that  would  not  be  playing 

9 


112     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

the  game  fairly,  and  I  decided  to  play  fair  with  the  Telephone 
Company,  as  I  felt  they  intended  to  play  fair  with  me.  I  found 
out  that  I  played  it  fairly  and  they  didn't." 

I  am  sorry  to  reveal  myself  as  a  person  of  low  ethical 
standards,  but  I  will  say  how  it  seems  to  me.  W.  F.  was  being 
made  the  victim  of  an  act  of  tyranny  and  intimidation,  and  if 
he  had  quietly  brought  it  about  that  his  brother-in-law,  Jack  Leo, 
or  his  other  brother-in-law,  Joseph  Leo,  had  quietly  secured  that 
piece  of  paper,  and  put  it  away  in  a  safe  and  retired  place,  he 
would  have  done  nothing  of  which  he  needed  to  be  ashamed. 

In  the  year  1929  Qtterson  was  forced  to  change  his  opinion 
about  the  Tri-Ergon  patents.  In  April  he  came  to  W.  F.  and 
offered  $5,000,000  for  them ;  W.  F.  said  he  would  take  $25,000,- 
000,  but  Jack  Leo  insisted  that  these  patents  might  prove  to  be 
vital  to  the  conduct  of  the  Fox  business,  and  certainly  the 
rights  should  not  be  sold  without  giving  the  Fox  companies  an 
opportunity  to  buy  them.  Shortly  afterwards  the  United  States 
Patent  Office  reached  the  conclusion  that  one  of  the  Tri-Ergon 
patents  was  valid — the  so-called  "fly-wheel,"  essential  to  the 
operation  of  sound  reproduction  machines.  Naturally  W.  F* 
wondered  whether  advance  information  had  come  to  the  Tele- 
phone Company  as  to  the  expected  action  of  the  patent  office. 

Here  you  see  W.  F. :  at  the  end  of  February  borrowing 
$15,000,000  from  the  Telephone  Company,  and  in  April  refusing 
to  sell  them  patents  which  are  necessary  to  their  control  of  his 
business.  Another  three  months  pass,  and  he  is  lying  in  his 
Rome  prostrated  after  a  serious  automobile  accident,  when  Otter- 
son  calls  him  on  the  telephone  and  asks  for  an  appointment. 
Otterson  comes  and  explains  that  he  is  going  abroad  for  the  pur- 
pose of  trying  to  pacify  producers  and  theatre  owners,  and  to 
make  an  arrangement  whereby  European  producers  of  pictures 
can  bring  their  products  to  America  and  American  producers  can 
show  their  pictures  abroad. 

W*  F.  says  that  he  doesn't  think  Otterson  can  arrange  that, 
because  the  Tri-Ergon  patents  have  been  declared  valid  abroad, 
and  will  soon  be  declared  valid  in  America,  and  no  one  will  be 
able  to  use  the  photoelectric  process  in  America  without  a  license 
from  Fox.  This  greatly  disturbs  the  powerful  Otterson,  and  he 
says  he  is  obliged  to  use  strong  language.  In  February  his  com- 


THE  OCTOPUS  113 

pany  loaned  W.  F.  $15,000,000,  and  promised  that  if  W.  F.  was 
not  able  to  pay  it  when  it  became  due,  they  would  extend  the 
loan.  More  than  that,  they  took  him  to  a  bank  and  arranged 
for  a  further  loan  of  $3,000,000.  And  how  is  Fox  repaying  them  ? 
How  is  he  acting  since  the  time  of  the  loan?  W.  F.  reports  the 
conversation : 

"I  said  I  didn't  think  I  had  done  anything,  and  wanted  to 
know  in  what  way  I  had  acted  incorrectly.  He  said,  'You  know 
darn  well  that  had  I  been  in  America  while  you  were  borrowing 
this  money,  I  wouldn't  have  allowed  it,  unless  you  let  us  buy  the 
Tri-Ergon  patents/  I  told  him  that  if  that  had  been  a  condition 
of  the  loan,  I  wouldn't  have  borrowed  the  money,  and  Loew's 
would  have  gone  to  Warners.  I  told  him  they  hadn't  loaned  me 
the  money  because  they  wanted  to  help  Fox  Film,  but  because 
they  wanted  a  general  release  of  all  the  previous  claims  we  had, 
for  the  work  on  which  we  had  spent  $6,000,000.  If  they  had 
kept  on  violating  the  promises  made  to  me,  the  value  of  the 
claims  we  had  against  the  company  were  well  over  $15,000,000. 

"Tutting  all  this  aside/  he  said,  'what  I  came  to  quarrel 
about  is  that  you,  William  Fox,  have  dared  to  send  a  written 
communication  to  the  Telephone  Company,  telling  them  that  they 
were  infringing  the  Tri-Ergon  patents/  I  told  him  there  was 
no  such  letter  according  to  my  knowledge.  He  assured  me  that 
they  had  gotten  such  a  letter.  I  told  him  that  if  they  were  vio- 
lating the  patents,  then  we  certainly  ought  to  claim  it;  but  if 
they  had  gotten  a  letter,  it  was  without  my  knowledge  and  con- 
sent. I  called  up  my  attorneys  and  inquired  about  such  a  letter, 
and  they  informed  me  that  one  had  been  sent.  Then  Otterson  ' 
said,  'All  right.  Let  us  try  to  dispose  of  this  whole  matter. 
How  much  do  you  want  for  these  Tri-Ergon  patents?'  I  asked 
him  to  make  an  offer.  He  said  I  had  quoted  him  a  price  before, 
but  I  told  him  that  price  was  off,  there  was  a  new  price  for  it 
today.  After  much  discussion  I  made  an  offer  of  $25,000,000, 
which  price  was  rejected,  and  he  went  abroad  without  acquiring 
the  Tri-Ergon  rights/' 

As  a  result,  Otterson  failed  in  his  mission  abroad.  And  you 
can  imagine  how  much  love  he  bore  in  his  heart  for  the  stubborn 
Fox,  and  how  much  of  a  desire  to  help  him  he  brought  back 
from  Europe! 


REEL  ELEVEN 
REAPING  THE  WHIRLWIND 

IN  telling  of  his  battle,  W.  F.  names  three  factors  which 
brought  about  his  defeat,  and  claims  that  all  three  were  beyond 
his  power  to  control.  First,  he  thought  he  had  obtained  the 
consent  of  the  Government  to  the  merger  of  Fox  and  Loew,  and 
he  had  no  means  of  knowing  that  the  Government  would  change 
its  mind.  Second,  he  had  no  means  of  knowing  that  an  unli- 
censed woman  driver  was  going  to  hit  the  rear  end  of  his  car 
and  lay  him  up  for  three  most  critical  months.  And,  finally,  along 
with  the  rest  of  the  American  people,  he  did  not  know  that  a 
panic  was  going  to  prostrate  the  financial  world  at  the  end  of 
October,  1929. 

The  first  time  that  W.  F.  came  to  the  city  after  his  accident 
was  on  Thursday,  October  24th.  He  came  to  attend  a  banquet 
given  in  honor  of  his  friend,  Col.  Claudius  H.  Huston,  newly 
appointed  treasurer  of  the  National  Committee  of  the.  Republican 
party.  This  was  a  distinguished  and  exclusive  affair.  The  Repub- 
lican party,  the  instrument  whereby  big  capital  governs  America, 
was  here  presenting  its  collector  of  funds  to  the  men  from  whom 
the  funds  were  to  be  collected.  To  lend  formal  sanction  to  the 
occasion,  there  came  several  members  of  the  Cabinet  and  several 
of  the  party  chiefs  from  the  Senate  and  House.  A  list  of  the 
New  York  guests  included  the  heads  of  every  large  financial 
group:  the  Rockefellers,  the  Morgans,  the  Chase  Bank,  the 
National  City  Bank,  the  Equitable  Trust,  and  all  those  investment 
banking  houses  whose  acquaintance  we  are  making  in  this  book : 
Kuhn,  Loeb,  and  Goldman,  Sachs,  and  Hayden,  Stone,  and  Dillon, 
Read,  and  Halsey,  Stuart.  The  august  nature  of  the  occasion 
may  be  understood  from  the  fact  that  the  newspapers  listed  those 
present,  but  were  ordered  not  to  report  the  speeches,  and  obeyed 
the  order.  This  was  a  time  when  the  Masters  of  America  were 

114 


REAPING  THE  WHIRLWIND  115 

going  to  consult  among  themselves.  Having  been  honored  with 
an  invitation,  W.  F.  attended,  doctor  or  no  doctor,  and  accounts 
it  a  divine  interposition ;  for  if  he  had  not  attended  that  dinner, 
he  would  have  been  a  ruined  man  a  week  later. 

There  were  a  number  of  orators,  among  them  James  Francis 
Burke,  Pittsburgh  lawyer,  whom  we  shall  meet  later  on ;  he  was 
general  counsel  for  the  Republican  National  Committee,  and,  as 
W.  F.  reports  it,  "If  2  per  cent  of  the  things  he  said  about  Colonel 
Huston  that  night  were  a  fact,  Huston  was  one  of  the  out- 
standing men  of  the  nation."  W.  F.  thinks  that  he  was,  and 
thinks  it  too  bad  that  he  became  involved  in  a  political  scandal 
and  had  his  career  destroyed. 

But  the  event  of  the  evening  for  W.  F.  was  the  speech  made 
by  Secretary  of  Commerce  Lamont.  It  was  the  most  important 
speech  W.  F.  ever  listened  to,  and  after  the  first  ten  minutes 
he  turned  to  a  friend  and  asked  who  the  gentleman  was.  Said 
W.  F. :  "That  man  Is  either  the  most  damn'  fool  man  I  ever 
listened  to,  or  the  most  intelligent  man  I  ever  listened  to.  Which 
is  it?"  The  friend  said  he  didn't  know,  but  would  inquire  of 
some  of  the  others  after  the  address.  The  others,  it  appeared, 
were  of  the  opinion  that  Lamont  was  a  brilliant  man. 

What  he  said  to  the  bankers  of  America  was  that  the  country 
was  in  a  very  grave  condition.  "He  went  on  to  tell  these  men 
that  no  nation  could  continue  when  its  citizens  refused  to  buy 
bonds;  that  all  great  nations  were  built  on  the  public's  willing- 
ness to  buy  bonds,  and  that  unless  a  great  market  could  be 
created  for  bonds,  and  this  speculation  in  common  stock  were 
terminated,  the  nation  was  threatened.  He  drew  a  picture  so 
black  that  I  trembled  at  the  thought  of  what  would  occur  the 
next  day  when  these  hundred  bankers  would  reach  their  offices, 
and  when  the  bell  would  ring  at  10  o'clock  in  Wall  Street*  No 
one  could  have  listened  to  him  that  night  without  wanting  to  sell 
every  share  of  stock  he  owned  the  next  morning." 

I  can  quite  understand  the  gratitude  of  W.  F.  to  Secretary 
Lamont  for  giving  him  that  stock  market  tip  at  a  critical  moment. 
No  doubt  all  the  bankers  were  grateful  to  him;  but  this  is  one 
more  case  where  I  have  to  differ  from  my  subject  as  to  the 
abilities  of  the  political  leaders  of  our  nation.  If  Secretary 
Lamont  had  made  that  speech  to  the  bankers  in  October  of  1928, 


116     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

I  would  have  considered  him  something  of  an  economist  and  a 
far-seeing  statesman,  I  would  have  thought  it  to  a  lesser  degree 
if  he  had  made  the  speech,  say,  on  October  15th  of  1929.  But  he 
made  it  on  the  evening  of  October  24th ;  and  consulting  headlines 
in  the  New  York  "Times"  I  find  as  follows:  October  17,  "Acute 
Weakness";  October  20,  "Wave  of  Selling  Engulfs  Market"; 
October  22,  "Continuation  of  Selling  Wave" ;  October  24,  "Paper 
Loss,  Four  Billion" ;  and  while  Secretary  Lamont  was  making  his 
speech,  the  headline  writers  of  the  New  York  "Times"  were 
describing  the  events  of  that  day  in  a  four-column  head  on  the 
front  page  as  follows: 

WORST  STOCK  CRASH  STEMMED  BY  BANKS 
12,894,650  SHARE  DAY  SWAMPS  MARKET 

Really  it  seemed  to  me  that  it  required  something  less  than 
genius  for  a  Secretary  of  Commerce  to  be  able  to  tell  the  bankers 
of  the  country  that  their  affairs  were  in  serious  danger  on  that 
night!  Also  I  am  amused  to  note  that  while  the  New  York 
"Times"  was  suppressing  the  speech  of  Secretary  Lamont  (in- 
tended only  for  the  bankers),  there  was  being  handed  out  to 
the  general  public  the  regular  official  "taffy,"  a  diet  of  which  we 
have  since  become  so  sick.  On  October  22d  the  front  page  head- 
lines told,  "Washington  Holds  that  Situation  is  Sound."  On 
Friday  the  25th,  the  same  issue  which  suppressed  Lament's 
speech,  the  headlines  read,  "Call  Break  Technical/  "  On  the 
26th,  the  headlines  said,  "Officials  Optimistic,"  and  on  October 
30th,  after  two  days  of  frightful  panic,  the  public  was  fed  on 
what  you  might  call  bi-partisan  taffy.  "Dr.  Julius  Klein  Declares 
Business  is  Sound" — that  is  the  assistant  Secretary  of  Commerce, 
speaking  for  the  Republicans.  "Time  to  Buy  Stocks,  Says  Ras- 
kob" — and  Raskob  is  the  proprietor  of  the  Democratic  party, 

But  let  us  return  to  the  adventures  of  W.  F.  He  says:  "I 
had  with  thirteen  brokers  approximately  $20,000,000  worth  of 
stocks  of  corporations  other  than  those  that  I  controlled,  and 
I  promptly  proceeded  to  sell  them  commencing  Friday  morning, 
October  25th.  By  Monday  afternoon  I  had  disposed  of  these 
$20,000,000  worth  of  stocks,  as  a  result  of  what  Lamont  had  said 
<m  Thursday  night.  When  the  bell  rang  in  the  New  York  Stock 


REAPING  THE  WHIRLWIND  117 

Exchange  on  Tuesday,  those  $20,000,000  worth  of  stock  were  not 
worth  $6,000,000,  and  had  I  not  acted  on  my  impulse  as  a  result 
of  what  Lamont  had  said,  not  only  would  my  companies  have 
been  embarrassed,  but  I  would  have  been  a  bankrupt." 

It  is  a  curious  thing  to  go  back  over  the  newspapers  of  those 
panic  days,  which  now  seem  so  far  away  'and  so  naive.  People 
were  appalled,  because  stocks  had  lost  $14,000,OQO,000  of  their 
paper  value  in  five  hours.  To  give  you  a  glimpse  of  events,  I 
have  taken  the  quotations  of  October  15th  before  the  beginning 
of  the  slump,  and  again  on  November  9th,  after  it  was  supposed 
to  be  over,  and  everybody  was  getting  ready  for  a  new  wave  of 
prosperity.  Fox  Film  had  dropped  from  101  to  71 ;  Fox  Theatres 
from  25%  to  15ys ;  Loew's  had  dropped  from  64*4  to  49%,  and 
American  Telephone  and  Telegraph  from  300%  to  229,  And 
they  thought  that  was  a  panic !  Not  even  the  genius  of  Secretary 
Lamont  could  look  forward  to  the  end  of  May,  1932,  when  I 
am  writing  this  book,  and  when  Fox  Film  stands  at  1%, 
Fox  Theatres  at  *4,  Loew's  at  16,  and  American  Telephone  & 
Telegraph  at  91%. 

You  may  remember  that-W.  F.  had  660,900  shares  of  Loew 
stock,  for  which  he  had  paid  more  than  $73,000,000,  and  in  the 
worst  of  the  panic  of  Monday  and  Tuesday  those  shares  lost 
more  than  half  their  value.  Two-thirds  of  them  were  in  the 
hands  of  bankers,  as  collateral  for  loans  which  had  been  incurred 
in  their  purchase ;  the  remaining  one-third  was  in  the  hands  of 
brokers,  having  been  purchased  on  margin  in  the  name  of  W.  F, 
and  his  relatives.  The  only  thing  that  made  it  possible  to  hold 
onto  these  shares  was  for  W.  F,  to  sell  his  other  stocks,  and  use 
the  money  as  margin  on  the  Loew  shares  which  he  was  trying 
to  hold  for  his  companies.  W.  F.  assures  me  explicitly,  "I  had 
not  sold  a  single  share  of  Loew's,  Fox  Film  or  Fox  Theatres/' 
Throughout  all  the  storms  and  conflicts  which  follow,  you  may 
picture  him  clutching  to  his  bosom  those  660,900  shares  of  Loew 
stock  which  he  had  purchased  for  his  companies,  and  the  happy 
ending  to  our  story  is  this  one  sentence :  "I  was  able  to  hold  onto 
the  660,900  shares  of  Loew  stock,  and  I  am  happy  to  say  that 
ultimately  the  Fox  Theatres  sold  these  shares  for  $75,000,000." 

Of  course  when  W.  F.  tells  us  that  on  Friday  and  Saturday, 
after  hearing  Lament's  speech,  he  got  rid  of  $20,000,000  worth 


118     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

of  stocks,  and  that  all  the  other  big  bankers  who  had  been 
present  at  that  dinner  followed  his  example,  what  he  is  really 
telling  us  is  that  he  and  the  other  bankers  brought  on  the  panic 
of  Monday  and  Tuesday.  But  such  is  the  world  we  live  in. 
Its  law  is  each  for  himself,  and  my  corporation  against  all  the 
other  corporations.  As  W.  F.  explains  it,  the  value  of  the  Loew 
shares  was  constantly  falling,  and  the  money  he  was  getting  from 
his  brokers  for  the  sale  of  other  shares  was  continually  being 
demanded  as  margin  on  the  Loew  shares. 

On  Tuesday  morning,  W.  F.  was  out  at  his  country  place,  in 
the  boathouse  which  fronts  over  the  water ;  he  was  living  on  the 
first  floor  and  his  friend,  Rubenstein,  who  had  been  a  victim  of 
the  automobile  accident  with  him,  was  living  on  the  second.  The 
telephone  rang  a  few  minutes  after  ten,  and  it  was  a  call  from 
one  of  W.  F,'s  brokers,  saying  that  the  Loew  shares  were  still 
declining,  and  that  W.  F.  must  send  him  immediately  a  check  for 
$250,000.  He  says :  "I  had  no  more  than  put  the  receiver  on 
the  hook  when  another  broker  called,  and  within  twenty  minutes 
the  number  of  brokers  that  called  for  additional  margins — when 
I  totaled  the  sum  it  was  more  than  $1,500,000.  I  called  my  office 
and  asked  them  to  make  out  these  checks  and  have  them  ready 
for  delivery.  I  had  no  sooner  hung  up  the  phone  when  the 
broker  that  wanted  $250,000  on  his  first  call  wanted  $500,000. 
And  soon  the  others  began  to  call.  The  funds  with  which  I  was 
to  make  these  payments  of  additional  margin  were  my  personal 
funds.  My  telephone  bell  kept  constantly  ringing,  and  when  all 
of  the  brokers  who  could  possibly  get  me  on  the  telephone  were 
through  calling  me,  it  was  clear  that  the  amount  of  money  they 
would  require  would  be  about  $4,000,000.  And  this  was  only 
12  o'clock — the  market  was  still  to  run  about  three  hours.  I 
called  my  secretary  and  told  him  to  tear  up  the  checks — we 
would  send  no  money  to  anyone. 

"I  was  tired  and  weary.  I  was  in  the  boathouse  by  myself, 
and  took  the  receiver  off  the  hook,  and  went  on  the  floor  above, 
the  room  that  Rubenstein  occupied,  and  lay  down  on  the  bed 
and  fell  asleep.  About  3:30  o'clock  I  heard  loud  yelling,  my 
name  was  called,  which  aroused  me,  and  when  I  came  downstairs, 
Rubenstein  had  returned.  He  was  in  a  panicky  condition.  I  asked 
him  what  was  the  matter.  He  said  there  was  a  panic  in  New 


REAPING  THE  WHIRLWIND  119 

York — hadn't  I  heard  him  yelling?  I  told  him  yes,  that  that  was 
what  had  awakened  me.  He  said  he  had  been  yelling  for  a  half 
hour  and  that  he  was  frantic.  The  boat  was  not  tied  up  to  the 
dock,  and  he  thought  I  had  drowned  myself.  He  said  my  room 
had  been  on  the  ground  floor  and  he  didn't  dream  of  looking  for 
me  upstairs.  He  just  found  the  receiver  off  the  hook,  and  was 
making  up  his  mind  what  to  do." 

Everybody  in  Wall  Street  was  thinking  about  suicide  that 
evening!  Some  were  actually  on  their  way  to  the  East  River, 
and  others  to  the  tops  of  high  buildings  from  which  they  jumped. 

W.  F.  told  his  wife  that  he  was  going  to  New  York,  there 
was  a  little  disturbance  in  the  market.  His  wife  was  ill,  and  he 
didn't  want  to  worry  her.  He  thought  he  would  be  back  in  a 
day  or  two,  but  as  a  matter  of  fact,  he  didn't  return  for  forty-five 
days,  and  he  says  that  in  those  forty-five  days  he  slept  exactly 
ninety  hours.  Fortunately  he  has  a  good  digestion,  and  had  had 
a  long  rest  in  preparation  for  this  ordeal.  It  didn't  worry  him  in 
the  least.  "I  rather  enjoyed  being  in  difficulties;  working  them 
out  was  a  satisfaction  to  me."  His  mother  had  told  him  when 
he  was  a  little  boy  that  "the  way  to  judge  a  general  is  not  in 
time  of  peace  but  in  war." 

And  besides,  it  was  going  to  be  easy.  Had  not  Harley  Clarke 
just  told  him  that  any  time  he  was  in  trouble,  to  call  on  him  and 
he  would  lend  him  several  million  dollars?  At  that  time,  you 
understand,  these  two  were  fifty-fifty  partners  in  the  Grandeur 
Company ;  so  now  the  first  man  that  W.  F.  called  on  was  Clarke, 
and  he  tells  the  story : 

"I  don't  think  Clarke  ever  heard  such  beautiful  music  in  his 
life  as  when  I  told  him  I  was  in  difficulties.  A  symphony  was 
playing — his  dream  was  about  to  be  realized.  Of  course  he 
wouldn't  loan  me  any  money !  He  didn't  say  that  he  didn't  have 
it,  or  that  he  was  affected  by  the  crash  himself,  but  on  my  plea 
for  a  loan,  it  was  just  NO.  He  didn't  whisper  the  word,  he 
yelled  it  This  was  the  day  that  he  evidently  was  waiting  for." 

But  W.  F.  didn't  worry  very  much  about  Clarke — there  were 
his  great  friends,  Halsey,  Stuart  &  Co.  He  sent  for  the  manager 
of  their  New  York  office  and  told  him  the  story  frankly.  The 
Loew  shares  had  dropped  to  a  point  where  his  margin  was  short 
$10,000,000,  and  he  wanted  a  loan  to  save  the  situation.  The 


120     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

manager  said  he  would  advise  Stuart  at  once,  and  he  did  so,  and 
the  reply  was  that  Stuart  himself  was  in  difficulties  and  could 
lend  W.  F,  nothing. 

But  still  W.  F.  didn't  worry.  There  were  his  all-powerful 
friends,  the  Telephone  Company.  He  sent  for  his  friend, 
ex-Lieutenant  Otterson,  and  Otterson  said  to  tell  him  the  whole 
story.  That  was  Tuesday  evening,  and  Otterson  said  he  would 
intercede  with  the  Telephone  Company  the  first  thing  in  the 
morning,  and  at  10  o'clock  in  the  morning  he  called  up  to  say 
that  he  had  done  so,  and  was  sorry,  but  the  Telephone  Company 
had  loaned  as  much  money  as  it  cared  to  lend  to  any  one  man. 
W,  F.  thought  it  over,  and  called  again  on  the  telephone,  and 
said : 

"Look  here,  John,  perhaps  I  had  no  reason  to  ask  your  com- 
pany to  loan  me  any  further  money,  but  we  talked  about  this 
thing  last  night,  and  this  was  to  be  a  loan  without  collateral,  and 
I  would  like  to  have  $13,000,000,  but  I  don't  think  I  should  take 
it  without  collateral.  I  am  going  to  give  you  my  personal  col- 
lateral. My  job  is  to  save  these  companies;  I  am  not  going  to 
think  about  myself  in  this  at  all." 

W.  F.  continues:  "I  enumerated  what  I  owned  personally 
and  what  the  companies  owned  that  was  not  hypothecated,  and 
the  total  was  $50,000,000.  I  asked  the  Telephone  Company  to 
make  a  secured  loan  of  $13,000,000.  He  said  that  sounded  dif- 
ferent from  the  day  before.  But  in  a  few  minutes  he  called 
back  and  told  me  that  Gilford  had  said  no,  they  didn't  want 
to  loan  me  any  more.  I  sensed  the  fact  that  the  Telephone 
Company  was  likewise  hearing  a  symphony.  Here  was  Fox 
where  he  could  no  longer  be  the  owner  of  the  Tri-Ergon  patents 
— this  was  the  day  they  were  waiting  for/' 

So  then  W.  F.  went  looking  for  the  key  to  some  other  treasure 
chest.  He  had  had  dealings  with  the  banking  firm  of  Hayden, 
Stone  &  Co.,  and  bethought  himself  of  Richard  F.  Hoyt,  a  mem- 
ber of  that  firm.  His  experience  with  this  gentleman  goes  back 
to  the  time  in  1926  when  W.  F.  bought  his  West  Coast  theatres. 
The  three  men  who  were  selling  it  were  in  a  hotel  room,  in  their 
shirt  sleeves ;  they  were  working  late  on  a  complicated  deal,  and 
had  everything  settled,  the  papers  drawn  and  ready  for  signature, 
when  two  of  the  men  who  were  making  the  deal  received  a  tele- 


REAPING  THE  WHIRLWIND  121 

phone  call,  and  excused  themselves  and  left  the  room  without 
their  coats,  and  did  not  come  back.  Later  they  said  they  had 
changed  their  minds  about  the  deal;  the  third  man  signed,  and 
Fox  got  only  one-third  interest  in  the  company. 

Later  on  W.  F.  discovered  what  had  happened.  The  West 
Coast  purchase  included  21,000  shares  of  First  National  Pictures 
Corporation,  and  when  this  corporation  discovered  that  West 
Coast  was  selling  out  to  Fox,  they  rushed  to  their  bankers, 
Hayden,  Stone,  and  got  this  concern  to  purchase  the  other  two- 
thirds  of  West  Coast. 

So  Fox  took  up  negotiations  with  Richard  Hoyt  of  Hayden, 
Stone  to  buy  these  other  shares,  and  wasn't  getting  anywhere. 
Meanwhile,  having  made  friends  with  the  Telephone  Company, 
he  asked  them  to  help  him,  and  they  said  they  would  go  to  the 
Morgans  about  it,  and  have  the  Morgans  give  the  orders.  A  day 
or  two  later  Hoyt  invited  W.  F.  to  breakfast  with  him,  and  was 
extremely  angry  because,  as  he  said,  W.  F.  had  "used  the  big 
stick"  upon  him.  The  Telephone  Company  had  called  upon  the 
all-powerful  House  of  Morgan,  and  the  Morgans  had  sent  for 
Hoyt  and  told  him  they  would  consider  it  a  favor  if  he  could 
see  his  way  clear  to  sell  the  West  Coast  to  Fox.  Hoyt  was 
furious,  and  said  he  wasn't  going  to  allow  such  methods,  and 
that  any  chance  that  W.  F.  had  had  to  buy  the  stock  had  now 
disappeared.  It  was  Hoyt's  intention  to  merge  West  Coast  with 
the  Stanley  Corporation,  a  chain  of  theatres  in  Pennsylvania  and 
New  Jersey. 

It  happened  that  Hayden,  the  senior  partner  of  the  firm,  was 
in  Egypt,  He  was  an  old  gentleman,  looking  for  a  rest,  and  W. 
F.  shrewdly  figured  that  being  an  old-timer,  he  would  figure  that 
he  was  in  the  banking  business,  and  not  in  the  business  of  con- 
ducting chains  of  "movie"  theatres.  So  W.  F.  made  the  mild 
suggestion  that  Hoyt  should  cable  Hayden  and  tell  him  of  Mor- 
gan's polite  suggestion  concerning  the  West  Coast  shares.  Hoyt 
fell  into  the  trap,  and  a  few  days  later  he  sent  for  W.  F.  and 
said  that  W.  F.  had  "tricked"  him.  From  this  W.  F.  knew  what 
the  reply  to  the  cablegram  had  been,  and  he  purchased  the  West 
Coast  shares  from  Hoyt  for  $16,500,000. 

Of  course  Hoyt  made  a  big  profit  on  this  deal,  probably 
one-third  the  purchase  price.  Also  he  got  a  very  good  profit 


122     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

from  Fox  Film;  for  in  order  to  make  the  purchase,  Fox  Film 
sold  its  stockholders  $20,000,000  worth  of  new  shares  from  its 
treasury,  and  Hayden,  Stone  got  something  over  $3  a  share, 
or  approximately  two-thirds  of  a  million  dollars  on  this  transac- 
tion. 

Then  a  little  later  W.  F.  made  another  deal  with  Hoyt.  A 
group  of  Wall  Street  operators  headed  by  W.  C.  Durant  took 
hold  of  Fox  Film  stock  and  proceeded  to  run  it  up  for  their 
own  purposes.  They  started  it  from  $70  a  share  and  ran  it  to 
$119,  and  W.  F.  knew  that  this  was  going  to  cause  his  stock- 
holders to  sell  out  and  ultimately  meet  with  losses;  so  he  went 
to  see  Hoyt,  and  told  him  that  he  wanted  to  stop  this  rise,  and 
that  he  proposed  to  offer  the  stockholders  of  Fox  Film  150,000 
shares  of  stock  from  the  treasury  at  $85  a  share.  W,  F.  gave 
the  orders,  and  the  shares  were  put  on  the  market,  and  the  specu- 
lators3 pool  was  broken — at  a  profit  to  Hayden,  Stone  of  five  or 
six  hundred  thousand  dollars. 

You  might  think  from  these  things  that  Richard  F.  Hoyt 
would  have  cherished  friendly  feelings  for  William  Fox.  But, 
alas,  there  had  been  other  developments  not  so  pleasant.  When 
you  are  taking  part  in  this  big  business  scramble,  it  is  hard  to 
keep  from  treading  on  other  people's  toes,  and  friends  of  one 
day  become  enemies  of  the  next.  There  were  the  21,000  shares 
of  First  National  which  W.  F.  had  acquired  along  with  the  West 
Coast  purchase.  This  common  stock  was  supposed  to  be  without 
value,  but  Warner  Brothers  bought  the  Stanley  Company  and 
got  another  21,000  shares  of  First  National,  and  if  they  could 
have  got  the  West  Coast  shares,  they  would  have  had  control  of 
the  company.  So  Hoyt  came  to  W.  F.  and  said,  "You  have  had 
a  streak  of  luck.  I  have  just  sold  those  21,000  shares  of  First 
National  for  you.  I  have  got  you  $100  a  share,  and  this  will 
reduce  your  cost  price."  But  W.  F/s  answer  was  that  he  was 
very  sorry  that  Hoyt  had  made  such  a  deal ;  he  didn't  want  to 
sell  those  shares,  because  he  had  no  desire  to  help  his  competitors 
by  having  Warner  merge  First  National.  Instead,  he  wanted  to 
buy  the  other  First  National  shares  himself ! 

W.  F.  had  got  these  shares  for  nothing,  and  here  he  was 
refusing  $2,100,000  for  them,  and  Richard  F.  Hoyt  was  losing 
the  profit  on  a  big  deal.  Worse  than  that,  W.  F.  went  on  to 


REAPING  THE  WHIRLWIND  123 

build  up  these  companies  to  a  point  where  they  earned  $5,500,000 
in  one  year.  According  to  W.  F/s  calculation,  that  made  them 
worth  $55,000,000.  And  Hoyt  looked  back  on-the  fact  that  W.  F. 
had  forced  him  to  sell  them  for  about  one-third  of  that  price! 

We  come  now  to  the  evening  after  the  panic,  when  W.  F.  is 
summoning  Hoyt  to  his  assistance.  He  is  thinking  of  all  the 
millions  he  has  helped  Hoyt  to  make;  and  Hoyt,  naturally,  is 
thinking  of  all  the  other  millions  which  W.  F.  helped  him  not 
to  make.  Hoyt  has  been  to  a  dinner  party  that  evening ;  the  rest 
of  America  is  in  terror,  but  nothing  troubles  the  elegant  Mr. 
Hoyt,  the  tip-top  of  grace  and  fashion,  A  little  before  midnight 
he  comes,  in  evening  clothes  with  his  shiny  top  hat,  his  silk-lined 
overcoat  and  shiny  walking  stick.  He  is  a  graduate  of  Harvard, 
tall,  thin,  clean-shaven,  always  smiling;  he  has  penetrating  eyes, 
talks  fast,  thinks  fast,  and  knows  the  game. 

He  listens  to  the  recital  of  how  W.  F.  has  to  have  $13,000,000 
tomorrow.  When  W.  F.  told  this  story  in  my  home,  he  asked 
the  young  woman  stenographer  please  to  leave  the  room.  The 
young  woman  went  out  onto  the  porch,  and  closed  the  door,  and 
W.  F.  told  me  the  story,  and  said,  "Now,  how  can  you  put  that 
story  into  a  book?"  I  replied  that  it  required  only  one  slight 
emendation,  the  changing  of  a  word,  and  then  it  would  be  a  per- 
fectly proper  story  to  put  into  a  book.  So  W.  F.  called  the  young 
woman  back,  and  dictated  his  account  of  his  interview  with 
Richard  F.  Hoyt. 

"I  had  proceeded  about  ten  minutes  when  I  realized  I  might 
just  as  well  be  telling  my  troubles  to  a  stone  wall — that  my  words 
were  falling  on  deaf  ears.  I  said,  'I  am  sure  I  could  read  your 
mind/  He  said,  'All  right,  if  you  think  you  can,  -  go  ahead/ 
I  said:  'What  is  running  through  your  mind  is  that  you  figure 
I  used  the  wrong  method  to  acquire  the  West  Coast  Theatres 
Company,  two-thirds  of  which  you  sold  to  me  for  $16,500,000, 
and  which  is  now  worth  $55,000,000,  and  that  this  story  of  trou- 
bles is  music  to  your  ears,  and  what  you  would  like  to  do  is  to 
cut  out  my  left  kidney/  He  said:  'I  am  glad  to  see  you  did 
that  mind-reading  act  so  well,  because  when  you  go  broke,  as 
you  will,  you  will  be  able  to  earn  a  good  living  doing  a  mind- 
reading  act  on  the  stage.  You  have  made  only  one  mistake — it 
isn't  the  left  kidney  I  want  to  cut  out,  but  both  kidneys/  At  the 


124     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

conclusion  of  which  he  tools:  his  tall  silk  hat  and  walking  stick 
and  walked  out." 

So  W.  F.  realized  that  he  had  to  solve  his  problems  without 
help  from  his  powerful  banking  friends.  He  continues : 

"The  panic  of  October  29  was  so  severe  that  very  few,  if 
any,  brokers  in  New  York  had  gone  home  that  night.  Everybody 
was  open  so  that  their  margin  clerks  could  figure  out  the  amount 
of  margin  their  customers  had  to  put  up  the  next  day.  About 
1  o'clock  I  concluded  I  would  send  for  one  of  these  brokers,  one 
who  I  thought  would  be  most  friendly,  and  with  whom  my 
account  was  $1,000,000  in  the  red.  I  frankly  told  him  what  had 
occurred,  the  position  I  was  in,  and  asked  him  whether  he  thought 
his  firm  would  be  indulgent  for  a  day,  for  twenty-four  hours, 
during  which  time  I  hoped  to  raise  enough  money  to  pay  the 
deficiency.  I  told  him  it  was  my  plan  to  invite  the  heads  of  my 
thirteen  brokerage  firms  to  my  apartment  the  next  morning  at  9 
o'clock ;  that  I  was  going  to  propose  they  proclaim  a  moratorium 
for  twenty-four  hours,  and  that  I  wanted  somebody  to  be  there  to 
urge  it.  He  said  he  would.  Then  we  called  these  brokerage  firms 
and  asked  them  to  appear  at  9  o'clock  the  next  morning/' 

The  brokers  came,  and  W.  F.  informed  them  that  he  owed 
them  a  small  matter  of  $10,000,000  and  didn't  have  it.  They 
had  close  to  a  quarter  of  a  million  shares  of  his  Loew  stocks  on 
margin,  and  if  they  sold  these  shares,  they  would  drive  the  price 
to  nothing,  and  would  lose  their  $10,000,000.  He  had  tried  to 
get  a  bid  on  the  shares,  and  the  best  offer  he  could  get  was  $5 
a  share.  So  he  asked  them  to  pledge  themselves  not  to  sell  any 
of  these  shares  for  twenty-four  hours.  If  they  refused,  W.  F. 
would  put  on  the  market  the  400,000  shares  of  Loew  stock  which 
Fox  Theatres  owned,  and  that  would  be  the  end  of  everything. 

There  was  a  long  pause  and  finally  one  of  the  brokers  said : 
"What  are  you  hesitating  about?  If  we  agree  not  to  sell  these 
shares,  he  may  be  able  to  raise  the  money.  There  is  a  chance/' 
So  they  gave  him  the  twenty-four  hour$*  moratorium. 

I  have  told  you  that  W.  F.  believes  in  special  Providence, 
and  thinks  he  can  prove  it.  He  offered  me  a  number  of  instances 
in  the  course  of  his  life,  and  this  is  one  of  them.  Here  he  was 
in  his  apartment  at  the  Ambassador  Hotel,  having  to  raise 
$10,000,000,  and  having  no  idea  of  how  to  begin,  when  the  tele- 


REAPING  THE  WHIRLWIND  125 

phone  rang,  and  on  the  wire  was  his  friend,  Albert  M.  Greenfield, 
chairman  of  the  Bankers'  Securities  Company  of  Philadelphia. 
Half  a  year  back  Greenfield  had  been  carrying  on  negotiations 
for  the  sale  of  that  First  National  stock  which  W.  F.  had  got 
free  of  charge  along  with  his  purchase  of  West  Coast.  He  had 
added  to  his  holdings  in  the  meantime,  and  now  had  25,000 
shares.  You  recall  that  for  this  stock  a  short  time  back  he  had 
received  an  offer  of  $2,100,000  through  Richard  F.  Hoyt  repre- 
senting Warner  Brothers.  The  Warners  still  wanted  this  stock — 
and  they  were  still  at  the  height  of  their  prosperity  and  had 
plenty  of  money.  W.  F.  had  forgotten  all  about  it,  because  there 
had  been  £©  talk  of  the  sale  of  these  shares  between  the  time  of 
his  accident  in  July  and  this  Wednesday,  October  30th. 

As  it  happened,  Greenfield  didn't  know  W.  F.  was  in  trouble 
— and  W.  F.  didn't  consider  it  necessary  to  tell  him.  Greenfield 
said  he  thought  he  could  get  five  or  six  million  dollars  for  the 
shares,  and  perhaps  in  view  of  the  panic  yesterday,  W.  F.  would 
be  willing  to  take  that.  But  W.  F.  said  that  was  ridiculous.  He 
didn't  want  to  sell  them  at  any  such  price.  (As  an  aside  to  me, 
he  said/ "Of  course,  you  realize  that  I  would  have  foden  happy 
to  sell  them  for  any  price  whatever,  provided  it  was  for  cash.") 

W*  F.  told  Greenfield  to  come  to  New  York,  and  he  came. 

"I  had  rehearsed  Rubenstein,  I  had  told  him  that  if  Green- 
field knew  I  was  in  trouble,  the  largest  price  I  cotald  get  would 
be  the  five  or  six  million  dollars  he  had  told  me  about  over  the 
phone.  I  said  to  him,  fl  would  like  to  have  you -agree  with 
Greenfield  in  whatever  he  says,  and  disagree  with  me/  It  was 
so  rehearsed.  Greenfield  called  for  dinner,  and  before  we  had 
gone  half  way  through  the  meal  he  referred  to  the  First  National 
shares.  I  said,  *You  know  we  have  always  quoted  the  $15,000,000  , 
price.  I  realize  there  was  a  panic  yesterday,  and  if  these  men 
still  want  these  shares  they  can  get  them  for  $12,500,000.'  Green- 
field went  from  $5,000,000  up  the  scale  to  $10,000,000,  and  finally 
said  to  Rubenstein,  T>onjt  you  think  if  I  could  sell  these  shares 
at  $10,000,000  today  that  would  be  a  fine  piece  of  business  for 
Fox?'  Rubenstein  said  yes,  he  thought  it  would  be.  I  told 
Rubenstein  I  wished  he  would  keep  out  of  this  deal,  that  this 
was  not  his  affair.  So  we  got  into  a  terrific  row.  I  said  to 
Greenfield,  1  think  you  can  sell  these  shares  for  $12,500,000.' 


126     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Greenfield  came  back  that  night  at  midnight  with  an  offer  of 
$10,000,000.    He  said  he  would  consummate  the  deal  the  next 

morning."  , 

The  next  morning  at  9  o'clock  the  thirteen  brokers  reappeared, 
and  W.  F.  informed  them  that  he  had  the  money  in  sight,  and  if 
they  would  indulge  him  for  another  twenty-four  hours,  every- 
thing would  be  all  right.  That  day  the  Loew  shares  were  rising. 
On  October  29th  the  firm  of  Loeb,  Alsberg  &  Co.  had  tried  to 
get  a  bid  for  W.  F.,  and  the  best  offer  was  $5.  On  October  30th 
the  official  quotation  was  32,  which  W.  F.  says  was  because  all 
the  shares  were  held  off  the  market.  This  price  was  just  about 
50  per  cent  of  the  price  before  the  panic.  But  on  November  1st, 
they  came  back  to  501/4-  In  the  meantime,  Greenfield  had  con- 
summated his  transaction,  and  at  midnight  on  Thursday  he 
brought  W.  F.  $7,500,000  in  cash  and  $2,500,000  in  Warner 
Brothers'  notes. 

The  Stock  Exchange  was  closed  Friday  and  Saturday  to  give 
a  breathing  space,  and  on  Friday  morning  W.  F.  called  his 
brokers  and  put  up  new  margin,  and  they  agreed  to  hold  the 
shares  until  the  end  of  the  year  on  the  basis  of  a  margin  of  35 
per  cent  of  the  market  price.  Greenfield  got  a  commission  of 
half  a  million  dollars,  and  everybody  went  away  happy.  As  for 
W.  F.,  having  had  two  years  and  a  half  to  contemplate  these 
events  and  decide  what  he  thinks  about  them,  here  is  his  con- 
clusion, which  requires  no  comment  from  me : 

"It  is  clear  that  my  help  came  from  God  Almighty.  Men 
hadn't  helped  me — they  were  planning  to  destroy  me.  The  Lord 
didn't  want  me  destroyed.  He  wanted  to  save  me.  Why  these 
fools  went  out  that  day  and  borrowed  $10,000,000  to  buy  these 
shares  I  never  could  figure  out  Eight  hundred  thousand  was 
what  I  paid  for  them — what  right  had  any  man  to  believe  he 
could  sell  for  $10,000,000  what  he  had  purchased  for  $800,000? 
Is  it  humanly  possible  for  me  to  believe  otherwise  than  that  God 
inspired  them  to  the  point  of  wanting  to  buy  these  shares?  As 
events  have  proven  since,  they  would  have  been  better  off  if  they 
had  never  bought  them." 

W.  F.  did  not  explain  why  he  thinks  that  God  should  have 
been  so  hard  on  Warner  Brothers. 


REEL  TWELVE 
THE  FOX  TRAP 

THE  whirlwind  had  passed ;  and  those  Wall  Street  naviga- 
tors who  had  not  jumped  overboard  now  looked  around 
them,  and  set  to  work  to  repair  their  shattered  fortunes.  William 
Fox  was  saved;  but  he  saw  that  he  had  obeyed  his  doctors  too 
well,  and  rested  too  long;  he  must  set  to  work  without  another 
day's  delay  at  the  refinancing  of  his  Loew  and  Gaumont  pur- 
chases. It  was  now  November,  and  the  Telephone  Company 
loan  was  due  in  February,  and  the  Halsey,  Stuart  notes  on 
April  1. 

During  the  period  of  his  rest,  Harry  Stuart  had  come  to  his 
home  to  call  on  him.  Stuart  wanted  some  advice  about  the  new 
$75,000,000  securities  company  he  had  arranged;  also  he  wanted 
to  talk  to  W.  F.  about  the  refinancing  which  his  firm  was  to  do. 
W.  F.  had  said  that  he  was  ready  to  go  ahead,  and  Stttart  had 
promised  to  prepare  the  plan.  The  situation  with  tlie  Govern- 
ment was  all  right  now ;  as  soon  as  W.  F.  had  rested,  he*  would 
get  Schenck  and  Zukor  to  abrogate  their  contract,  afed  the  Depart- 
ment of  Justice  would  be  satisfied. 

Having  placated  his  brokers  and  some  of  his  bankers  with 
the  money  got  from  Warners,  W.  F.  went  to  see  his  friend  Harry 
Stuart  and  tell  him  the  good  news.  To  be  sure,  Stuart  had  just 
refused  him  help,  but  that  had  been  during  a  panic,  and  no  doubt 
Stuart  had  needed  his  cash  to  save  himself.  But  now  the  panic 
was  over,  and  Stuart  would  remember  that  he  had  sold  $40,000,- 
000  worth  of  Fox  shares  to  his  customers,  and  would  be  con- 
cerned for  the  safety  of  those  shares,  and  glad  to  know  that  Fox 
had  managed  to  ride  through  the  whirlwind.  Stuart  would  pro- 
ceed to  the  task  which  he  himself  had  urged — the  preparation 
of  the  new  issue,  and  the  introducing  of  them  to  the  investing 
public, 

10  127 


128     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

So  W,  F.  went  to  call,  accompanied  by  his  friend  Jacob  L. 
Rubenstein.  As  he  describes  the  interview  to  me,  he  found  "Dr. 
Jekyll  Stuart"  transformed  into  "Mr.  Hyde  Stuart/'  This  new 
Stuart  could  see  nothing  good  in  anything  that  W.  F.  had  done 
or  that  he  proposed  to  do.  He  insisted  that  the  sale  of  the  First 
National  shares  was  a  breach  of  his  understanding  with  W.  F., 
because  it  diminished  the  assets  of  the  Fox  companies,  upon 
which  Stuart  had  made  an  unsecured  loan  of  $12,000,000. 

Stuart  had  just  talked  with  Otterson  of  the  Telephone  Com- 
pany— the  first  time  these  two  gentlemen  had  met,  it  appears. 
They  had  met  for  the  purpose  of  discussing  the  Fox  enterprises 
and  their  various  ramifications.  They  had  reached  the  joint  con- 
clusion that  W.  F.  was  a  reckless  man ;  he  had  had  no  business 
to  take  on  the  English  commitment.  In  making  that  commitment 
he  had  put  in  jeopardy  the  $12,000,000  Stuart  had  loaned  and 
the  $15,000,000  the  Telephone  Company  had  loaned,  and  Stuart 
wanted  nothing  more  to  do  with  the  Fox  enterprises.  On  April 
1,  1930,  he  would  expect  his  $12,000,000.  So  far  as  he  was  con- 
cerned, W.  F.  could  do  his  financing  wherever  he  wished;  the 
firm  of  Halsey,  Stuart  wanted  nothing  further  to  do  with  it. 
W.  F.  was  released  from  the  preferential  contract  he  had  with 
them,  Stuart  had  reached  the  conclusion  that  Fox  was  not  what 
lie  always  thought  he  was. 

This  was  an  astonishing  experience  to  W.  F.  He  says :  '"From 
time  to  time  during  my  career  I  had  been  humiliated  in  one  way 
or  another,  at  least  I  thought  I  had  been  humiliated;  but  never 
in  all  my  life  had  I  received  such  humiliation  as  I  did  that  day 
from  Harry  Stuart.  He  seemed  to  gloat  over  the  fact  that  I  was 
in  difficulty." 

And  W.  F.  goes  on  to  speculate — what  could  it  have  been 
that  happened  in  that  conference  between  Otterson  and  Stuart? 
Obviously,  it  has  occurred  to  someone  among  these  powerful 
groups  that  the  Fox  is  down  and  can  be  dismembered  and 
"merged."  If  he  cannot  get  the  cash  to  keep  those  Loew  shares 
margined,  he  will  lose  them,  and  will  not  be  able  to  repay  the 
money  he  has  borrowed  from  Stuart  and  Otterson.  His  com- 
panies can  be  thrown  into  bankruptcy,  and  those  who  have  the 
cash — that  is,  Stuart  and  Otterson — will  be  able  to  buy  them. 
The  bankruptcy  proceedings  will  automatically  wipe  out  the  vot- 


THE  FOX  TRAP  129 

ing  shares — a  much  cheaper  way  than  that  proposed  by  Stuart's 
friend  and  associate,  Harley  L.  Clarke.  Whether  the  plan  to  lead 
the  Fox  into  a  trap  was  deliberately  conceived  or  not,  here  is  the 
creature  actually  in  a  trap;  and  to  Harold  Leonard  Stuart  and 
John  Edward  Otterson,  devout  Episcopalians,  and  to  Harley 
Lyman  Clarke,  devout  Christian  Scientist,  it  must  have  seemed 
beyond  question  Providential. 

How  did  it  come  about?  Did  Harold  Leonard  Stuart  say  to 
John  Edward  Otterson,  "See  here,  this  fellow  is  a  Jew,  and  he 
wears  a  sweater  and  white  socks,  and  doesn't  allow  his  bankers  a 
sufficient  profit  on  his  new  issues.  If  you  will  stand  by  us  now 
and  not  lend  him  any  more  money,  we  have  got  him  where  we 
want  him."  Or  did  John  Edward  Otterson  say  to  Harold  Leonard 
Stuart,  "See  here,  this  Jew  who  talks  about  himself  too  much 
wants  to  own  patents  and  control  the  talking  picture  industry, 
which  belongs  to  us.  He  has  had  the  insolence  to  notify  us  that 
we  are  infringing  his  fly-wheel  patent,  and  if  you  will  just  stand 
by  now  and  refuse  to  raise  any  money  for  him,  we  can  get  those 
Tri-Ergon  patents,  and  you  will  find  that  the  Telephone  Com- 
pany has  more  valuable  financing  to  do  than  the  Fox."  Or 
did  Harley  Lyman  Clarke  come  to  John  Edward  Otterson  and 
Harold  Leonard  Stuart  and  say,  "See  here,  I  have  decided  to 
go  into  the  moving  picture  business,  and  you  know  that  a  public 
utilities  financier  is  a  safer  person  to  deal  with  than  a  little  Jew 
upstart  who  won't  take  orders  and  wants  to  merge  everything 
in  sight.  If  you  will  help  me  hold  him  down  while  I  get  his  voting 
shares  away  from  him,  I  will  see  that  Stuart  gets  the  new 
financing,  and  that  the  Telephone  Company  gets  its  patents/* 

Which  of  these  three  things  happened  is  a  mystery  which  may 
never  be  solved;  but  that  one  of  the  three  did  happen  is  as  certain 
as  anything  can  be  in  human  affairs.  If  you  have  read  the  the- 
ologians, you  know  the  so-called  "argument  from  design"  of 
Dean  Paley;  if  you  found  a  watch  on  the  seashore,  you  would 
know  that  a  man  had  been  there,  since  the  parts  of  a  watch  could 
not  assemble  themselves  by  accident.  In  the  same  way,  when  you 
see  a  large  group  of  men  all  acting  in  concert — when  you  see 
hundreds  of  different  actions  contributing  towards  the  same  end 
— you  know  that  those  actions  are  not  arising  by  chance,  but  that 
somewhere  a  guiding  brain  has  conceived  a  plan. 


130     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Let  me  anticipate  to  the  extent  of  stating  that  while  much  of 
the  evidence  in  this  case  is  circumstantial,  and  while  a  great  deal 
of  it  rests  upon  the  unsupported  testimony  of  William  Fox,  the 
main  facts  of  the  conspiracy  were  publicly  admitted  by  the  con- 
spirators themselves,  when  they  appeared  by  their  attorneys  in 
open  court,  and  stated  that  they  were  not  satisfied  to  get  back  the 
money  which  W.  F.  owed  them;  in  fact  they  refused  to  take  the 
money  which  he  owed  them,  and  demanded  the  control  of  his 
properties.  I  shall  quote  the  exact  words  of  these  attorneys  in 
the  proper  place;  I  only  refer  to  them  here,  lest  it  may  appear  to 
you  that  W.  F.  was  over-suspicious,  and  that  his  case  is  being 
built  out  of  inf  erences- 

W.  F.  picked  up  a  hint  here  "and  a  hint  there.  About  ten  days 
after  Harley  Clarke  had  refused  help,  there  came  a  telephone 
call  from  Chicago.  Clarke  had  something  urgent  to  say,  and  he 
asked  that  it  be  kept  strictly  confidential. 

"He  had  indirectly  learned  that  the  Telephone  Company  and 
Halsey,  Stuart  had  merged  their  interest,  so  far  as  concerned  the 
Fox  companies,  and  he  thought  it  was  a  downright  shame.  He 
wished  to  repeat  to  me  what  he  had  said  during  the  summer, 
that  he  would  like  to  acquire  all  of  the  voting  shares  of  both 
companies,  and  if  perchance  I  couldn't  see  my  way  dear  to  sell 
all  of  them,  he  would  buy  a  half  interest  in  them.  His  banking 
facilities  were  large  enough  to  supply  all  the  money  the  companies 
needed.  But  the  question  was,  how  could  he  inject  himself  into 
the  picture.  He  didn't  want  to  incur  the  animosity  of  the  Tele- 
phone Company  and  Halsey,  Stuart,  and  therefore  he  wanted  me 
to  suggest  to  them  that  they  let  him  make  a  twenty-four  hour 
investigation  of  our  books,  to  get  a  quick  picture  of  the  whole 
condition;  he  would  then  refund  the  debts  of  these  companies, 
so  that  we  cmdd  repay  the  amounts  due  to  the  Telephone  Com- 
pany and  to  Halsey,  Stuart. 

"I  was  amazed  at  this  statement ;  It  was  news  to  me. ,  Up  to 
this  time  I  hadn't  known  that  there  was  a  merger  of  these  two 
interests,  and  couldn't  understand  why  the  consent  of  the  Tele- 
phone Company  and  of  Halsey  Stuart  was  necessary  to  raise 
funds  for  my  companies,  and  I  so  told  Clarke.  I  told  him  I 
would  ask  no  such  permission  from  Halsey,  Stuart.  He  called 
me  back  sometime  that  day,  and  said  he  had  finally  persuaded 


THE  FOX  TRAP  131 

Halsey,  Stuart  to  permit  him  to  make  an  examination  of  our 
books,  and  that  the  time  they  allowed  him  to  reach  a  decision 
was  forty-eight  hours.  If  within  forty-eight  hours  he  couldn't 
make  up  his  mind  to  supply  the  necessary  funds  for  financ- 
ing these  companies,  he  was  to  step  aside  and  stay  out  of  the 
picture. 

"His  accountants  went  to  work  on  our  books,  and  forty-eight 
hours  later  Clarke  called  on  me  in  the  Ambassador  Hotel.  He 
said  his  people  were  fully  prepared  to  take  over  these  companies; 
he  had  a  sufficient  financial  backing  to  supply  the  necessary  cash, 
but  that  he  was  not  interested  in  the  project  unless  he  could  buy 
the  whole  of  these  voting  shares.  I  told  him  that  that  was  con- 
trary to  what  he  had  said  over  the  telephone ;  that  he  had  then 
said  he  was  interested  in  buying  half,  and  that  the  management 
would  remain  in  my  hands.  Now  he  had  changed  his  attitude, 
and  I  was  not  interested  in  any  proposal  to  sell." 

W.  F/s  immediate  task  was  to  find  some  bank  to  take  the 
Loew  shares  out  of  the  hands  of  the  .brokers,  and  mafce  Fox 
Theatres  a  loan  upon  them.  W.  F/s  friend  Rubenstein  came  to 
him  witk  a  message  from  one  of  the  vice-presidents  of  the  Public 
Bank,  located  at  the  lower  end  of  Broadway.  This  gentleman 
wanted  to  see  W.  F.,  and  when  W.  F.  called  he  was  introduced 
to  the  president  of  the  bank,  named  Gersten.  W.  F.  told  Gersten 
the  whole  story,  and  told  what  he  wanted ;  he  had  had  an  account 
with  the  Public  Bank  for  many  years,  and  Gersten  expressed  his 
appreciation  of  that  account,  and  said  that  while  he  wasn't  in 
position  to  take  the  Loew  shares,  he  would  like  to  have  W.  F. 
increase  his  line  of  credit*  At  present  Fox  Film  owed  the  bank 
$450,000,  and  the  president  asked  him  to  increase  the  amount  to 
a  million,  as  they  had  a  lot  of  idle  money  in  the  bank.  So  W.  F. 
borrowed  the  money,  and  gave  a  note  for  four  months ;  and  early 
in  January,  when  the  first  note  for  $450,000  fell  due,  the  Public 
Bank  insisted  upon  immediate  payment,  and  forced  the  receiver- 
ship proceedings  against  W.  F.  Naturally  this  led  him  to  wonder : 
was  their  invitation  to  him  to  come  and  increase  his  credit  a  part 
of  the  effort  to  lead  him  on  and  get  him  into  the  hands  of  the 
banks  ? 

I  have  a  copy  of  the  letter  which  W.  F.  wrote  to  Gersten, 
and  I  have  Gersten's  reply.  His  defense  is  that  at  the  time  he 


132     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

loaned  the  additional  $450,000,  W.  F.  had  told  him  nothing  about 
his  troubles.  As  a  rule  when  you  go  to  a  banker  and  tell  him 
your  troubles,  there  are  no  witnesses,  and  if  afterwards  the 
banker  chaoses  to  say  that  you  deceived  him,  your  denial  has  no 
value.  But  it  happens  that  in  this  case,  Jacob  L.  Rubenstein  was 
present  at  the  interview.  Mr.  Rubenstein  and  his  father  had  been 
depositors  in  the  Public  Bank  since  the  day  it  was  organized, 
and  in  a  letter  to  me  he  states:  "Mr.  Fox  went  into  great  detail 
regarding  the  trials,  difficulties  and  tribulations  he  had  encoun- 
tered." 

W.  F.  now  began  making  the  rounds  of  the  banks  with  which 
his  companies  were  doing  business.  He  happened  to  know  very 
well  the  president  of  the  great  Chemical  National  Bank,  for  this 
gentleman  had  called  at  his  office  and  informed  him  that  he  had 
followed  the  career  of  W.  F.,  and  in  some  respects  it  was  like 
his  own;  he  too  was  a  self-made  man,  and  would  like  to  have 
W,  F.  tell  him  the  story  of  how  he  built  his  great  organization. 
W.  F,  never  objects  to  telling  that  story,  and  he  told  it  to  the 
president  of  the  Chemical  National ;  the  president  of  the  Chemi- 
cal National  in  turn  told  his  story  to  W.  F.,  and  they  were  a  pair 
of  cronies.  The  president  of  the  Chemical  National  liked  to  do 
business  with  self-made  men,  he  declared,  and  gave  the  Fox 
companies  a  fine  line  of  credit. 

So  now,  of  course,  W.  F.  thought  he  had  another  friend,  and 
went  to  see  this  Mr.  Percy  Johnson  and  told  him  the  situation. 
W.  F.  knew  that  this  bank  constantly  loaned  money  to  Wall 
Street;  in  fact,  Johnson  had  in  his  vaults  part  of  those  Loew 
shares  which  had  been  hypothecated  by  the  brokers.  W.  F. 
showed  him  the  balance  sheet  of  Loew's  and  the  fine  condition 
that  company  was  in ;  it  was  paying  regular  dividends  of  $3  a 
share,  or  $2,000,000  a  year  on  the  shares  which  W.  F.  held.  But 
that  meant  nothing ;  Percy  Johnson  was  sure  that  his  bank  could 
not  do  what  W,  F,  wanted. 

So  our  Fox  traveled  from  bank  to  bank.  In  each  case  tie 
would  say  if  they  didn't  take  all  the  shares,  let  them  take  part ; 
let  them  say  how  many  they  would  take.  But  nobody  would  take 
any.  Some  mysterious  influence  was  at  work — and  of  course 
W.  F.  did  not  forget  how  it  had  been  when  he  had  wanted  to 
buy  the  West  Coast  shares  from  Hayden,  Stone  &  Co.,  and 


THE  FOX  TRAP  133 

Richard  F.  Hoyt  wouldn't  agree  to  it,  and  W,  F.  had  gone  to  his 
friends,  the  Telephone  Company,  and  got  them,  to  go  to  the  Mor- 
gans, and  the  Morgans  had  dropped  a  hint  to  Hoyt,  and  Hoyt 
had  been  furious,  accusing  W.  F.  of  "using  the  big  stick"  on  him. 
Now  suppose  it  should  be  that  someone  having  influence  with  the 
Morgans  had  been  using  it  against  W.  F.  instead  of  for  him! 
Suppose  that  "big  stick"  was  hanging  over  the  head  of  the  Fox ! 

W.  F.  hated  to  believe  that,  of  course.  He  thought  maybe  it 
was  because  his  proposition  was  too  big  for  the  smaller  banks. 
He  must  go  to  a  big  one.  His  friend  Greenfield  had  introduced 
him  to  Hugo  E.  Scheurman,  a  vice-president  of  the  Park  National 
Bank,  who  had  extended  to  W.  F.  a  line  of  credit  of  $3,000,000. 
This  had  been  back  in  February  of  that  year,  and  in  the  mean- 
time Scheurman  had  become  a  vice-president  of  the  Chase 
National;  and  surely  here  was  a  big  enough  one — the  biggest 
bank  in  the  world! 

So  W.  F.  went  to  see  Scheurman,  and  told  him  his  troubles, 
and  told  him  of  his  visit  to  the  other  banks.  Scheurman  told  him 
to  stop  visiting  the  other  banks,  the  Chase  National  was  big 
enough  to  handle  the  whole  thing.  The  Chase  National  was 
liquid;  the  great  Mr.  Wiggin,  its  chairman,  had  had  foresight 
before  the  crash,  and  now  he  would  have  the  money  to  make  this 
desirable  loan.  W.  F.  was  to  come  back  after  luncheon  and  get 
the  final  word. 

W.  F.  is  sure  that  his  friend  Scheurman  was  sincere  in  the 
matter ;  he  just  didn't  happen  to  know  what  was  running  through 
the  head  of  Albert  H.  Wiggin,  chairman  of  the  Chase  National 
Bank  and  of  the  Chase  Securities  Corporation.,  W.  F.  did  not 
know  it  either.  It  was  only  later  that  he  learned  that  Wiggin  and 
Clarke  were  intimate  associates  and  partners  in  all  kinds  of  under- 
takings, and  that  for  anything  Clarke  wanted  to  do,  the  money  of 
Chase  National  and  Chase  Securities  was  available,  while  for 
anything  that  Clarke  wanted  not  done,  the  money  was  absolutely 
non-existent.  W.  F.  saw  the  results  after  luncheon,  when  his 
friend  Scheurman  told  him  that  he  was  very  sorry,  but  the  bank 
could  not  take  any  part  of  the  loan. 

All  this  visiting  and  shopping  and  telling  of  troubles  had 
taken  a  couple  of  weeks;  and  now  W.  F.  saw  clearly  that  he 
could  not  get  what  he  wanted  from  a  bank,  but  must  find  a  new 


134     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

investment  bouse  to  offer  a  new  issue  of  Fox  shares  to  the  public. 
Harry  Stuart  had  thrown  him  out,  and  wanted  nothing  more  to 
do  with  him;  very  well,  he  would  find  another  firm. 

For  several  years  he  had  been  dealing  from  time  to  time  with 
Dillon,  Read  &  Company.  He  had  had  a  fuss  with  them  at  the 
time  he  had  acquired  the  Loew  shares,  because  this  firm  had 
been  the  bankers  for  Loew's,  and  considered  that  Schenck  had 
double^rossed  them  in  selling  the  shares  without  their  getting  a 
profit  First  Mr,  Miller  and  then  Mr.  Phillips  of  the  firm  had 
called  and  entered  a  strenuous  protest.  W.  F.  had  tried  to  explain 
to  them  that  he  was  not  to  blame  for  what  Schenck  had  done; 
and  he  had  promised  them  that  when  he  was  ready  to  do  the  new 
financing,  Dillon,  Read  would  be  "in  the  picture/' 

And  now  here  was  a  fine  chance  for  Dillon,  Read  to  be  the 
whole  picture,  all  by  themselves.  W.  F.  called  on  Mr,  Miller,  and 
said  he  wanted  to  have  a  conference  with  Clarence  Dillon,  head 
of  the  firm.  Miller  said  he  would  be  glad  to  arrange  it,  and  the 
next  day  there  was  a  luncheon  at  one  of  the  luncheon  chibs, 
attended  by  Dillon  and  several  other  members  of  the  firm,  and 
also  by  W.  F.  and  his  friend  Rubenstein,  who  apparently^  knew 
all  the  bankers  in  New  York,  and  was  traveling  around  with  his 
friend  Fox,  trying  to  help. 

So  now  we  make  the  acquaintance  of  another  big  investment 
house,  Dillon,  Read  &  Company  had  shot  to  the  front  in  the  past 
few  years,  among  the  new  crop  of  wizards  who  were  creating 
millions  upon  millions  overnight.  They  bought  the  Dodge  Com- 
pany from  the  widows  of  the  owners  for  $146,000,000,  and  they 
waved  their  wizard  hands  and  overnight  there  was  a  new  cor- 
poration, and  a  profit  of  $34,000,000  for  the  financiers.  From  that 
time  on  the  Dodge  Company  began  to  slide,  and  in  the  end  Dillon, 
Read  put  it  off  on  Chrysler.  Wall  Street  men  now  point  to  the 
Chrysler  Building  and  remark,  playfully:  "That  was  Chrysler's 
commission  on  the  Dodge  deal." 

Clarence  Dillon  is  one  of  those  Jews  who  have  forgotten  the 
fact.  He  is  tall,  good-looking,  egotistical,  a  rapid  talker,  and  you 
get  the  impression  that  he  knows  what  he  is  talking  about.  W.  F. 
says  it  is  hard  not  to  believe  that  he  is  a  kind  man;  which,  of 
course,  is  a  useful  impression  to  give  in  Wall  Street  I  happen 
to  know  someone  whom  he  employed  in  a  confidential  capacity, 


THE  FOX  TRAP  135 

and  I  asked  this  person  about  his  character,  and  the  answer  took 
only  two  words :  'Wholly  unmoral/' 

At  this  luncheon  Dillon  gave  W.  F.  the  impression  of  being 
extremely  nervous.  The  lunch  was  an  elaborate  one,  and  every- 
body had  enough  to  eat,  including  Dillon;  but  in  the  center  of 
the  table  was  a  massive  bunch  of  grapes — there  for  an  ornament, 
which,  as  a  rule,  nobody  bothers.  But  all  during  the  conference, 
which  lasted  for  an  hour  or  two  after  the  luncheon,  Dillon  kept 
picking  at  the  grapes,  and  by  the  time  the  conference  was  over 
he  had  cleaned  up  the  massive  bunch.  W.  F.,  watching  him 
closely,  was  trying  to  figure  out  what  his  nervousness  was  about 

Afterwards,  when  the  conference  was  over,  W.  F.  saw  clearly. 
Dillon  hadn't  come  there  to  negotiate  a  business  deal  with  a  new 
and  valuable  customer.  Dillon  had  come  under  orders  from 
somebody  higher  up,  to  tell  W.  F.  that  he  must  part  with  his 
voting  shares.  And  Dillon  perhaps  didn't  like  that  job  so  much; 
he  might  have  preferred  to  be  a  financier,  instead  of  an  errand 
boy  for  a  conspiracy. 

However,  Dillon  did  the  job  very  tactfully.  He  told  W,  F. 
that  he  was  vitally  interested  in  W.  F/s  proposition ;  since  Halsey, 
Stuart  had  abandoned  their  preferential  contract,  Dillon,  Read 
would  be  glad  to  do  the  Fox  financing.  There  was  only  one  thing 
that  stood  in  the  way  of  the  deal,  and  that  was  the  voting 
shares.  Dillon  didn't  consider  such  voting  shares  the  proper 
way  of  controlling  a  company.  Couldn't  W-  F.  see  his  way  to 
dissolve  them? 

W.  F.  was  puzzled  by  this  statement,  and  called  Dillon's  atten- 
tion to  the  fact  that  he  was  the  last  man  itl  the  world  to  make 
such  a  request  When  he  had  bought  Dodge  Brothers,  and  sold 
it  to  the  public  at  a  profit  of  $34,000,000,  he  had  vested  the 
control  in  half  a  million  shares  of  voting  stock,  and  kept  all  this 
for  his  own  firm.  Dillon,  a  banker  who  had  never  been  in  the 
automobile  business  and  knew  nothing  about  it,  held  the  Dodge 
voting  shares ;  so  how  could  he  recommend  that  Fox,  who  was  in 
the  motion  picture  business  and  knew  all  about  it,  should  dissolve 
the  Fox  voting  shares  ?  Dillon's  answer  to  this  is  told  in  W.  F/s 
own  words : 

"He  then  told  me  I  had  better  dissolve  those  voting  shares 
and  do  it  voluntarily,  because  if  I  didn't  I  might  be  compelled  to. 


136     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

I  might  find  my  company  controlled  some  day  by  someone  I 
knew  nothing  of.  I  paid  no  attention  to  all  that— to  me  it  sounded 
like  idle  talk.  Only  later  when  I  learned  from  his  own  lips  that 
he  was  Wiggin's  best  friend  and  adviser  did  I  recall  that  I  was 
then  talking  to  a  man  who  most  likely  had  discussed  the  Fox 
situation  with  the  Chase  crowd,  and  that  Dillon  was  ^ thoroughly 
familiar  with  this  man  who  was  not  in  the  motion  picture  busi- 
ness who  was  going  to  succeed  me  if  I  didn't  voluntarily  dissolve 
these  voting  shares.  In  any  event,  he  must  have  known  that  these 
companies  were  about  to  be  taken  away  from  me,  and  he  knew 
it  was  by  a  man  not  in  the  motion  picture  business.  True  to  his 
prediction,  the  man  who  acquired  the  business  was  never  in  the 
motion  picture  business.  Dillon  said  that  of  course  unless  I 
agreed  to  dissolve  these  shares,  his  good  firm  couldn't  lend  itself 
to  the  enterprise/' 

When  W.  F.  went  away  and  thought  this  over,  he  realized  for 
the  first  time  that  there  was  a  movement  on  foot  that  was  not 
intended  to  be  of  help  to  him.  Until  then  he  had  been  living  in 
a  fool's  paradise,  but  now  he  saw  that  he  was  in  serious  danger. 
He  saw  that  he  had  only  one  real  friend  left,  the  great  Telephone 
Company  which  had  loaned  him  $15,000,000.  So  he  sent  again 
for  John  E.  Otterson,  and  told  him  how  the  banking  world  had 
closed  its  doors  to  him,  and  he  must  have  the  aid  of  the  Tele- 
phone Company.  This  company  had  on  deposit  several  hundred 
million  dollars  in  the  New  York  banks,  and  if  the  Telephone 
Company  would  say,  ''Lend  this  man  some  money/*  no  banker  in 
New  York  would  say  no.  W.  F.  tells  about  this  interview  : 

"Otterson  said  of  course  they  would  help  me.  I  told  him  I 
had  had  lunch  with  Clarence  Dillon;  that  Dillon  wanted  these 
voting  shares  dissolved,  the  thing  I  wouldn't  do.  He  said  there 
was  no  reason  for  dissolving  them,  and  asked  me  did  I  want  the 
firm  of  Dillon,  Read  to  do  this  banking.  I  said  yes,  because  they 
would  play  an  important  part  in  the  consolidation  of  the  Loew 
and  Fox  companies,  they  being  the  bankers  for  the  Loew  com- 
pany. He  said,  "All  right.  I  will  arrange  that  the  firm  of  Dillon, 
Read  gives  your  matter  careful  consideration.  We  have  a  private 
opinion  of  that  firm,  but  under  instructions  of  the  Telephone 
Company  there  is  no  danger  of  them  doing  any  harm  here,  How- 
ever, we  will  insure  that.  I  am  going  to  arrange  for  Mr.  Bloom 


THE  FOX  TRAP  137 

to  take  lunch  with  Dillon  tomorrow  and  tell  Dillon  of  the  interest 
of  the  Telephone  Company  in  this  matter/  " 

"Mr.  Bloom"  is  Edgar  S.  Bloom,  president  of  Western  Elec- 
tric, and  next  to  Gifford  the  big  man  in  the  Telephone  Company  ; 
so  this  meant  that  Otterson  was  really  going  to  put  things 
through.  Says  W.  F. : 

"I  was  informed  by  Otterson  that  Dillon  and  Bloom  had  had 
lunch,  and  that  the  firm  of  Dillon,  Read  was  now  prepared  to 
give  me  the  financial  assistance  I  required.  I  met  with  Miller, 
and  he  actually  prepared  a  plan  for  the  financing  of  the  Fox 
enterprises  that  involved  the  issuing  by  the  company,  the  purchas- 
ing and  marketing  by  Dillon,  Read  of  $75,000,000  in  preferred 
stocks  at  a  price  that  was  most  attractive  to  the  company.  I  was 
met  in  the  n^ost  friendly  spirit.  All  my  troubles  had  vanished. 
Dillon,  Read  were  happy  and  proud  to  be  the  bankers  for  these 
institutions.  They  gave  me  the  memorandum  that  showed  the 
type  of  securities  they  were  going  to  have  issued  and  sold.  To 
me  it  sounded  like  Aladdin  and  his  wonderful  lamp,  and  it  looked 
as  if  we  had  consummated  the  transaction.  Otterson  was  in  the 
room  all  of  the  time." 

But  then  came  a  sudden  turn  in  the  conversation.  "I  then 
called  Miller's  attention  to  the  fact  that  one  of  the  Fox  sub- 
sidiary companies  had  a  $500,000  note  that  was  falling  due  the 
next  day,  and  in  view  of  the  fact  that  we  had  gone  along  so  well, 
and  that  this  plan  was  so  wonderful,  perhaps  Dillon,  Read  could 
find  itself  in  a  way  to  loan  the  company  $500,000,  so  that  our 
contract  wouldn't  go  to  protest.  Up  to  this  time,  no  obligation 
had  fallen  due  and  was  unpaid ;  the  record  was  clear  from  the 
day  the  company  was  created  until  the  day  I  stood  in  this  room 
in  the  office  of  Dillon,  Read.  Miller  inquired  as  to  what  collateral 
I  had  for  this  loan.  Fox  Film  still  had  six  notes  left  that  the 
Warners  had  given  it  when  the  First  National  shares  were  pur- 
chased. I  told  him  so.  I  told  him  the  notes  were  in  my  pocket. 
He  wanted  to  see  them,  so  I  showed  them  to  him. 

'The  face  value  of  two  of  these  notes  was  $500,000.  He  took 
the  six  notes  out  of  my  hand,  and  said  what  right  had  I  to  walk 
around  the  streets  of  New  York  with  these  notes  in  my  pocket — 
didn't  they  belong  in  the  vaults  of  my  company?  I  told  him  that 
I  was  trying  to  sell  them  and  raise  some  money.  He  said  to 


138     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

leave  all  she  notes  with  him  and  they  would  loan  me  $500,000.  I 
told  him  that  that  would  be  a  value  of  W*5™'™'™****1 
needed  the  other  four  in  order  to  raise  another  $1,OOO,UUU.  We 
told  me  they  would  loan  me  $500,000  on  all  six  notes  but  not  on 

two  of  them. 

"So  it  was  clear  to  me  that  this  was  not  a  friend  at  ail ;  this 
was  a  foe.  His  whole  attitude  toward  making  this  loan,  the 
questions  he  asked,  indicated  clearly  to  me  that  I  had  spent  a 
day  in  vain ;  that  the  memorandum  he  had  prepared  was  a  sub- 
terfuge; they  had  no  intention  of  selling  $75,000,000  worth  of 
bonds  and  stocks  for  me.  I  asked  him  for  a  copy  of  the  memo- 
randum of  the  plan  he  had  just  prepared,  and  I  left  there  and 
never  went  back."  . 

The  working  out  of  a  big  financing  plan  such  as  this  is^of 
course,  a  highly  confidential  matter.  It  is  something  like  going 
to  a  clinic  to  have  your  inwards  examined ;  you  have  to  submit  to 
a  rigid  inquisition,  and  tell  all  your  secrets.  If  W.  F.  had  gone  on 
with  Miller,  he  would  have  had  to  turn  out  all  his  pockets  and 
open  all  the  safety  boxes  of  himself  and  his  companies.  His  books 
and  accounts  would  have  been  gone  over  by  a  firm  of  certified 
accountants,  an  elaborate  process  which  takes  at  least  a  month, 
and  perhaps  two  or  three.  He  would  have  revealed  to  his  enemies 
every  secret  of  his  business,  every  bank  where  his  companies 
had  a  deposit,  both  at  home  and  abroad;  every  broker  where 
they  had  an  account — and  so  on  through  a  long  list  of  affairs. 

Most  crucial  of  all  was  the  time  involved.  If  a  banking-house 
agrees  to  finance  you,  and  really  is  your  friend  and  means  to 
do  what  it  says — then  you  are  lucky.  But  if  a  banking  house 
promises  to  finance  you,  and  then  stalls  you  along,  promising  to 
have  papers  ready  this  week,  and  then  putting  it  off  until  next 
week — weiif  that  is  the  very  essence  of  this  conspiracy;  the  way 
in  which  the  banking  business  is  turned  into  the  business  of  high- 
way robbery.  For  while  yoa  are  led  along,  waiting  and  hoping 
and  living  on  broken  promises,  precious  time  is  passing,  and  your 
notes  are  f  afling  due  at  the  banks ;  the  first  thing  you  know  the 
banks  have  come  down  on  you,  and  there  are  suits  for  a  receiver. 

How  dangerous  this  game  is  you  can  see  from  what  happened 
in  the  case  of  Halsey,  Sttaart  W.  F.  had  never  doubted  that  this 
great  firm  was  his  f riend,  and  had  given  them  a  preferential  con- 


THE  FOX  TRAP  139 

tract  to  do  the  future  financing  of  his  companies.  This  was  a 
written  document  and  Stuart  had  it.  Now  he  had  kicked  the  Fox 
out  and  told  him  to  go  elsewhere;  but  that  was  not  a  written 
document,  and  presently  we  shall  find  Stuart  repudiating  it,  and 
his  firm  in  open  court  standing  on  their  preferential  contract,  and 
denying  the  right  of  the  Fox  companies  to  have  their  financing 
done  by  anybody  else.  When  your  one  purpose  is  to  delay  a  man 
until  his  obligations  fall  due  at  the  banks,  any  sort  of  pretext 
will  do,  no  matter  how  clumsy;  and  this  clumsy  pretext  was 
enough  to  keep  W.  F.  tied  up  in  a  tangle  of  litigation,  and  to 
make  it  practically  impossible  for  anybody  else  to  do  business 
with  him. 

The  Fox  was  thoroughly  frightened  now,  and  wouldn't  go 
ahead  with  Dillon,  Read  in  spite  of  Otterson's  insistence.  Two 
months  later  he  realized  what  a  narrow  escape  he  had  had,  for  he 
met  Qarence  Dillon  again,  and  Dillon  told  him  the  truth.  Let 
W.  F.  tell  this  in  his  own  words : 

"Dillon  expressed  great  sympathy  for  the  predicament  I  found 
myself  in.  I  said,  'You  know,  Qarence,  it  is  strange  that  you 
predicted  it — that  if  I  didn't  dissolve  my  shares,  some  stranger 
would  take  my  place.  Of  course  you  know  that  about  three  days 
after  we  met  I  went  back  to  your  firm  and  Miller  had  prepared: 
a  very  comprehensive  plan.  Otterson  told  me  that  he  got  yott  to 
change  your  mind ;  that  they  had  solicited  your  good  will  in  behalf 
of  my  companies;  that  you  had  lunch  with  Bloom  and  he 
requested  that  you  play  square  with  me/  Clarence  became 
incensed  with  that,  and  if  ever  he  told  the  truth,  I  know  he  told 
it  then  when  he  said  that  if  the  Telephone  Company  had  reported 
that  in  that  lunch  there  was  any  discussion  for  his  firm  to  treat 
squarely  with  me,  I  was  to  take  it  from  him  it  was  a  dirty  lie. 
He  said,  'I  can't  tell  you  what  was  said  then,  but  it  was  not  that 
I  should  treat  square  with  you.' 

"Dillon  furthermore  denied  that  he  knew  anything  about  any 
plan  that  Miller  had  prepared.  He  said  I  was  telling  him  some- 
thing he  now  heard  for  the  first  time.  He  laughed  at  the  very 
idea  that  Dillon,  Read  contemplated  the  issuing  of  $75,000,000 
worth  of  securities.  It  is  clear  to  me  that  the  idea  was  to  have 
me  go  along  indefinitely,  until  these  obligations  became  due  and  I 
no  longer  had  time  to  turn  anywhere." 


REEL  THIRTEEN 
THE  FOX  HESITATES 

WE  have  come  now  to  the  latter  part  of  November.  It  is 
important  to  bear  in  mind  that  the  panic  had  been  over  for 
two  or  three  weeks,  and  conditions  were  gradually  returning  to 
normal.  The  government  and  all  the  organs  of  public  opinion 
were  proclaiming  that  the  slump  had  been  an  accident,  a  passing 
flurry,  and  all  but  a  few  Socialists  and  cranks  accepted  this, 
Stocks  began  gradually  to  climb  again.  At  their  lowest  official 
quotation  during  the  panic,  the  Loew  shares  were  close  to  30. 
A  month  later  they  had  come  back  to  45,  and  in  three  months 
more  they  were  at  70,  and  a  month  after  that  at  76.  American 
Telephone  &  Telegraph,  which  had  dropped  close  to  200,  at  the 
same  intervals  climbed  to  224,  241,  264.  This  latter  stock  is 
representative,  and  shows  the  trend  of  the  market. 

Understand,  therefore,  that  throughout  this  winter  and  spring 
of  W,  E's  desperate  battle,  he  was  not  trying  to  save  himself 
in  the  midst  of  a  depression,  but  on  a  rising  market  There  was 
plenty  of  money  again  for  everybody— except  the  Fox  which  had 
been  marked  for  destruction.  If  any  investment  banking  house 
had  wanted  to  sell  a  million  shares  of  Fox  Film  and  Fox  Theatres 
to  the  stockholders,  to  finance  the  purchase  of  the  Loew  and  the 
Gaumont  shares,  that  transaction  could  have  been  put  through 
without  tHe  slightest  difficulty,  and  the  concern  in  question  could 
have  made  $5,000,000  out  of  it.  But  no  banking  house  would 
take  this  $5,000,000,  at  the  price  of  incurring  the  displeasure  of 
the  Telephone  Company,  Halsey,  Stuart  &  Co,,  and  the  Chase 
National  Bank. 

W.  F.  wasn't  going  to  get  an  honest  schedule  of  new  financing 
from  any  investment  house  in  New  York,  nor  was  he  going  to 
get  credit  from  any  bank  in  New  York.  There  was  only  one  way 
lie  could  save  himself,  and  that  was  by  selling  some  of  the  things 

140 


THE  FOX  HESITATES  HI 

which  his  companies  owned.  What  did  he  have?  Well,  he  had 
660,900  shares  of  the  common  stock  of  Loew's,  Inc. ;  but  he  had 
paid  $125  a  share  for  400,000  shares,  and  upwards  of  $70  or  $80 
a  share  for  the  remainder,  and  at  present  his  companies  would 
have  had  to  take  a  huge  loss,  which  W.  F.  would  have  held  to  be 
a  deep  disgrace. 

But  also  he  had  the  shares  of  West  Coast  Theatres.  He  had 
had  this  concern  long  enough  to  build  it  up,  and  its  shares  were 
now  worth  about  three  times  what  he  had  paid  for  them.  That 
was  W.  F.'s  notion  of  the  proper  kind  of  sale  to  make,  and  he 
turned  his  thoughts  thereto. 

He  remembered  his  friend  Albert  M.  Greenfield,  chairman  of 
the  Bankers'  Securities  Corporation.  Greenfield  was  a  true 
friend ;  also,  he  was  involved  in  the  matter,  because  his  concern 
had  loaned  W,  F.  $10,000,000,  and  as  it  was  a  small  concern, 
the  amount  loomed  enormous  in  Greenfield's  thoughts.  Just 
recently  he  had  made  the  $10,000,000  sale  of  First  National  shares 
for  W.  F.  and  he  had  not  forgotten  the  two  notes  of  Warner 
Brothers,  each  for  $250,000,  which  he  had  earned  in  this  trans- 
action. Certainly  Greenfield  would  be  glad  to  undertake  another 
deal  between  W.  F.  and  the  Warners. 

Greenfield's  wife  was  now  in  the  hospital,  ill,  but  after  a 
couple  of  weeks  W.  F.  learned  that  her  temperature  was  normal, 
and  he  urged  his  friend  to  come  to  New  York.  Greenfield  said 
he  would  come,  with  the  understanding  that  he  could  leave  within 
one  hour  after  his  arrival.  It  takes  two  hours  to  come  from 
Philadelphia,  and  two  hours  to  get  back,  and  five  hours  was  as 
long  as  Greenfield  would  stay  away  from  the  bedside  of  his  wife. 
So  W.  F.  said  all  right.  Greenfield  was  to  arrive  at  seven  in  the 
evening,  come  to  W.  F/s  hotel  and  eat  dinner  with  him,  and  get 
back  to  the  Pennsylvania  Station  in  time  to  take  the  8  o'clock 
train.  Dinner  would  be  waiting,  and  everything  would  go  through 
on  schedule. 

Up  to  this  time  Greenfield  had  been  told  nothing  about  W.  F.'s 
troubles,  and  W.  F.  thought  it  would  be  better  for  him  to  hear 
the  bad  news  after  he  had  had  dinner.  W.  F.  urged  him  to  eat 
first,  and  take  the  9  o'clock  train;  but  Greenfield  said  no,  he 
must  take  the  8  o'clock  train.  You  may  picture  him  seated  at  that 
dinner  table,  "this  little,  bald-headed  Hebrew  Jew,"  as  W.  F. 


142     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

described  him  to  Herbert  Hoover;  short,  solidly  btiilt,  smooth- 
shaven  and  very  white  of  skin,  wearing  glasses,  an  alert  and  keen 
business  man,  waiting  now  for  a  proposition.  Let  W.  F.  tell  the 
story : 

"I  can  recall  that  he  had  a  mouth  full  of  food,  eating  very 
rapidly,  and  insisting  that  I  tell  hint  what  I  had  00  my  mind. 
When  I  informed  him  about  my  companies,  that  they  were  in 
serious  difficulties,  that  there  were  rumors  that  a  receiver  might 
be  appointed,  it  may  be  that  he  swallowed  the  food  that  he  had 
in  his  mouth ;  I  am  not  sure,  but  I  know  he  became  violently  ill. 
We  sent  for  a  bell-boy  to  get  all  kinds  of  medicine.  He  didn't  go 
back  to  Philadelphia  for  at  least  fourteen  days  thereafter,  and 
that  night  when  he  engaged  a  room  on  the  floor  above  me,  he 
asked  my  friend  Rubenstein  to  sleep  with  him,  to  see  that  noth- 
ing happened.  I  thought  that  was  a  fine  plan,  because  I  felt 
tfeat  Rubeasfcein  himself  was  contemplating  suicide,  and  they 
would  be  watching  each  other,  and  nothing  would  happen  to 
either  one/* 

The  next  morning  Greenfield  felt  better,  and  he  remembered 
that  Warner  Brothers  had  large  sums  of  cash  on  hand;  surely 
they  would  be  glad  to  buy  a  chain  of  500  theatres,  including  the 
best  in  eleven  states  west  of  the  Rocky  mountains !  What  would 
W.  F,  take  for  the  West  Coast  Company?  W.  F.  figured  that  the 
value  should  be  decided  on  the  customary  basis  of  ten  times  the 
company's  earnings.  West  Coast  had  earned  $5,500,000  during 
1929,  and  therefore  the  price  should  be  $55,000,000.  The 
purchaser  mast  guarantee  to  use  Fox  Film  productions  in  the 
theatres,  and  give  to  Fox  Film  in  rentals  an  amount  equal  to 
what  it  had  received  in  1929. 

Tfee  idea  of  getting  a  commission  on  a  $55,000,000  deal  looked 
fine  to  Greenfield,  He  went  tip  to  the  home  of  the  Warners,  and 
caste  back  that  night  and  said  they  were  vitally  interested.  It 
would  be  the  greatest  coup  the  firm  could  make.  They  talked  to 
their  bankers,  Goldman,  Sachs,  which  was  marketing  Warner 
bonds  as  fast  as  it  could  turn  the  handle  of  the  bond-making 
machine;  these  bankers  said  that  they  would  be  very  glad  to  put 
up  the  money.  The  news  that  the  Warners  had  bought  this  huge 
chain  of  theatres  would  boost  their  stocks  to  the  sky,  and  there 
would  be  no  limit  to  the  new  bonds  that  could  be  sold. 


THE  FOX  HESITATES  143 

But  now  came  a  peculiar  development.  Otterson  of  the  Tele- 
phone Company  found  out  about  these  negotiations.  Of  course, 
there  couldn't  be  any  negotiations  with  any  investment  house  in 
New  York  that  the  Telephone  Company  didn't  hear  about  it 
promptly.  Otterson  came  to  see  W.  P.,  and  then  later  came  Harry 
Stuart,  and  later  came  Otterson  and  Stuart  together. 

Yoti  may  ask,  what  did  these  gentlemen  have  to  do  with  W. 
F/s  proposition  to  sell  the  West  Coast  theatres?  If  he  gat 
$55,000,000,  he  would  pay  off  the  $15,000,000  he  owed  to  the 
Telephone  Company,  and  the  $12,000,000  of  the  Halsey,  Stuart 
notes,  and  the  $3,000,000  which  the  Telephone  Company  had 
persuaded  the  Chatham  &  Phoenix  Bank  to  lend  him — $30,000,- 
000,  plus  interest,  and  then  he  would  be  through  with  Halsey, 
Stuart  &  Co.  and  with  the  Telephone  Company,  and  these  gentle- 
men would  not  have  to  corne  to  see  him  any  more.  So  what  was 
the  matter  now? 

Otterson  explained  what  was  the  matter.  He  said  that  W.  F. 
was  under  obligation  to  the  Telephone  Company,  and  couldn't 
get  away  from  that  obligation.  The  company  was  asking-  a  favor 
— the  first  favor  it  had  ever  wanted.  It  didn't  want  Warner 
Brothers  to  get  the  West  Coast  theatres.  The  Warners  were  its 
enemies,  and  it  didn't  want  its  enemies  to  get  this  great  advan- 
tage. 

Warner  had  suggested  buying  a  half  interest  m  tfoe  West 
Coast  at  half  of  W.  F/s  price ;  and  W.  F.  now  told  this  to  Otter- 
son,  and  Otterson  asked,  would  W.  F.  be  willing  to  have  Zukor 
of  Paramount  as  his  partner  in  the  enterprise  instead  of  Warner? 
W.  F.  said  it  would  be  all  the  same  to  him.  Let  him  tell  the 
story : 

"Said  Otterson,  We  will  do  more  than  that  for  you.  I  want 
to  prove  our  friendship.  We  will  buy  the  whole  thing  for 
$55,000,000,  and  sell  Zukor  half  of  it;  the  Telephone  Company 
will  own  the  other  half,  and  it  will  give  you  three  years  to  regain 
it/  Again  I  fell  into  a  trap.  That  sounded  wonderful  to  rne,  I 
authorized  him  to  see  Zukor.  I  told  him  we  would  sell  it  to  him 
for  ten  times  the  earnings.  Our  accounts  would  be  certified  by 
an  accountant  of  his  selection/* 

Stuart  came  in ;  both  he  and  Otterson  were  enthusiastic  over 
the  deal,  and  asked  for  authority  to  negotiate  it,  and  went  off  to 
n 


144     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

attend  to  It.   But  then  came  Greenfield,  and  Greenfield  was  not 
so  pleased.  Said  Greenfield : 

"In  the  transaction  over  the  First  National  I  was  a  broker 
and  wanted  a  commission.  But  then  I  didn't  know  you  were  in 
trouble.  Now  you  are  in  trouble  and  I  am  no  longer  a  broker  but 
a  friend.  I  say  to  you  now  that  if  I  make  a  sale,  I  will  not  ask 
for  a  commission.  But  as  a  friend,  I  think  you  are  walking  into 
a  trap.  I  think  you  made  a  mistake  to  authorize  Otterson  and 
Stuart  to  buy  these  shares.  I  have  a  feeling  that  this  thing  is  not 
going  to  come  out  right,  and  I  had  better  keep  on  dealing  with 
Warner  Brothers,  because  I  think  these  men  are  stringing  you. 
Will  you  please  let  me  continue  to  hold  onto  the  Warners  for 
you?  I  have  an  engagement  and  want  to  continue  these  negotia- 
tions ;  in  fact,  Harry  Warner  is  now  in  my  room  upstairs  at  this 
time  and  I  want  you  to  come  upstairs  and  meet  him/' 

So  W.  F.  went  upstairs  to  meet  Warner,  and  Warner  had 
changed  his  mind  again,  and  wanted  to  buy  the  whole  thing. 
But  the  price  was  too  high.  W.  F.  told  of  the  proposition  which 
was  being  made  to  Zukor,  and  Warner  thought  he  might  take 
half  with  Zukor.  They  argued  back  and  forth,  but  did  not  come 
to  a  settlement.  Let  W.  F.  continue  the  tale; 

'T  went  back  to  my  apartment.  A  few  minutes  later  Stuart 
and  Otterson  appeared  and  said  we  had  done  the  most  con- 
temptible thing  they  ever  heard  of.  We  had  authorized  them  to 
make  this  sale,  and  while  they  were  talking  with  Zukor,  Green- 
field and  I  were  talking  to  Warner  upstairs.  They  said  Zukor 
didn't  want  any  part  of  it  now,  and  Warner  didn't  want  any  part 
of  it  now.  They  both  withdrew  from  the  room  for  a  moment, 
and  when  they  returned  Otterson  acted  as  spokesman  for  the 
Telephone  Company  and  Halsey,  Stuart.  Otterson  reminded  me 
that  the  Telephone  Company  was  a  creditor  of  Fox  Film  Cor- 
poration for  $15,000,000  and  that  he  was  also  talking  for  the 
firm  of  Halsey,  Stuart,  who  were  a  creditor  of  the  company  for 
$12,000,000.  They  had  both  reached  a  conclusion  that  these 
companies  of  tfiine  were  insolvent,  and  he  said  he  now  demanded 
in  behalf  of  the  New  York  Telephone  Company  and  Halsey, 
Stuart  &  Company  a  proxy  of  my  voting  shares.  He  said  they 
wanted  the  power  of  attorney  to  run  my  companies  from  now  on. 
'The  firm  of  Halsey,  Stuart  and  the  Telephone  Company  will  now 


THE  FOX  HESITATES  145 

take  your  companies  over/  He  went  into  a  tirade  that  lasted  ten 
minutes.  I  thereupon  left  the  room,  went  into  an  adjoining  bed- 
room, and  lay  down  and  went  to  sleep/' 

The  next  day  the  two  gentlemen  came  back.  They  were  in  a 
more  polite  frame  of  mind,  and  Stuart  said  he  was  sorry  for  his 
attitude  of  yesterday,  but  he  still  thought  that  the  best  interests 
of  W.  F.  required  that  he  enter  into  a  voting  trust  agreement,  and 
turn  over  to  trustees  his  voting  shares  which  controlled  Fox  Film 
and  Fox  Theatres.  Says  W.  F. : 

"Stuart  made  a  careful  explanation  of  a  willingness  and 
desire  to  be  of  great  service  to  these  enterprises,  and  said  that  if 
I  would  consent  to  Otterson  being  one  of  the  trustees  and  Stuart 
being  the  other  trustee,  then  the  firm  of  Halsey,  Stuart,  with  the 
aid  of  the  Telephone  Company,  would  undertake  the  refinancing 
of  these  projects.  He  said  they  wanted  to  make  little  or  no 
change  in  the  present  running  of  the  organization;  that  I  had  no 
right  to  suspect  that  this  was  anything  else  but  a  friendly  gesture, 
and  to  prove  how  friendly  it  was,  it  was  the  intention  of  the 
Telephone  Company  that  when  it  had  received  its  $15,000,000 
back,  to  surrender  the  trusteeship  of  Otterson,  and  that  then  his 
brother,  Charles  Stuart,  would  receive  the  trusteeship  that  Otter- 
son  would  surrender. 

"I  told  Stuart  I  saw  no  difficulty  in  the  whole  matter.  I  said, 
'You  have  expressed  to  me  in  the  most  friendly  terms  the  wish 
to  help  my  enterprise.  I  have  had  the  most  friendly  relationships 
until  the  crash ;  I  have  had  no  reason  to  distrust  you  except  for 
your  attitude  since  the  crash ;  I  am  perfectly  willing  to  create  this 
trusteeship,  with  the  distinct  understanding  that  there  is  to  be 
little  or  no  change  in  the  set-up  of  these  organizations,  and  that  I 
have  no  objection  to  the  firm  of  Halsey,  Stuart  having  two  of 
the  trustees  after  the  Telephone  Company  receives  its  moneyY' 

So  Stuart  and  Otterson  gave  W.  F.  a  memorandum  of  the 
conditions  under  which  they  were  jointly  willing  to  save  the  Fox 
enterprises.  He  was  to  give  the  trustees  a  power  of  attorney 
without  limit  of  time,  and  the  trustees  were  to  be  free  to  make 
such  changes  as  they  thought  advisable.  There  was  to  be  a  new 
board  of  directors,  and  Fox,  as  president,  was  to  remain  subject 
to  the  option  of  the  powers  of  attorney,  The  memorandum  added, 
"May  ask  for  more,"  and  also  it  added,  "Are  Warner  notes  in 


146     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

treasury  ?"  These  were  the  notes  which  W.  F.  had  been  so  indis- 
creet as  to  display  at  Dillon,  Read's  in  the  presence  of  Qtterson. 
W.  F.  took  this  home  to  think  it  over,  and  the  more  he  thought 
about  it  the  less  he  liked  it 

It  was  after  this  that  W.  F.  decided  that  he  needed  a  lawyer, 
"Up  to  this  time,"  he  says,  "I  had  not  taken  the  advice  of  an 
attorney.  I  was  conceited  enough  to  think  that  I  could  work 
myself  out  of  this  difficulty.  But  now  for  the  first  time  I  had 
been  definitely  confronted  with  a  clear,  precise  understanding  of 
what  the  Telephone  Company  was  desirous  of  accomplishing. 
And  at  this  stage  I  felt  that  I  must  promptly  be  advised  of  my 

legal  rights." 

One  of  the  bankers  to  whom  W.  F.  owed  a  couple  of  million 
dollars  suggested  Col.  Joseph  M.  Hartfield  as  a  Wall  Street 
lawyer  competent  to  deal  with  this  situation.  W.  F/s  friend  and 
family  lawyer,  Benjamin  Reass,  ratified  this  suggestion,  so  Hart- 
field  was  sent  for,  and  made  himself  familiar  with  the  difficulties, 
and  consented  to  act  as  attorney  for  Fox  Film  and  Fox  Theatres. 

Colonel  Hartfield  is  a  figure  well  known  in  Wall  Street,  and  a 
favorite  subject  for  the  sketch  artists  of  newspapers.  He  is  not 
much  more  than  four  and  a  half  feet  high,  and  when  he  sits 
in  a  chair  hk  little  fat  legs  do  not  come  anywhere  near  the  floor, 
so  he  has  a  way  of  tucking  them  under  him.  W.  F.  first  esti- 
mated that  he  is  as  broad  as  he  is  long;  then  he  qualified  by  esti- 
mating that  his  circumference  is  equal  to  his  height.  He  is  a 
bachelor,  a  devotee  of  the  sporting  world,  and  frequently  seen  at 
race  tracks.  "He  lets  no  conference  go  without  commenting  on 
his  popularity  with  the  ladies.  Each  conference  would  end  with 
the  saB&e  statement:  If  it  was  in  the  afternoon,  he  was  going  to 
have  tea  with  charming  ladies ;  if  it  was  evening,  he  was  going 
to  have  dinner  with  charming  ladies.  I  have  no  reason  to  sup- 
pose he  was  not  telling  the  truth/' 

Hartfield  is  what  is  known,  as  a  "Kentucky  colonel" ;  he  was 
born  in  that  state,  and  does  not  mention  that  he  is  a  Jew  unless 
you  cross-exaoiine  him  about  it  He  has  the  Southern  twang, 
and  says  "you~alF  this  and  "yoti-alT  that.  He  is  humorous,  and 
carries  a  charming  smile,  even  when  he  is  angry.  You  may  pic- 
ture him,  a  dark  smooth-shaven  gentleman,  fat  and  jolly,  with 
not  much  hair  left,  and  a  thin  voice.  He  possesses  a  brilliant  rnind, 


THE  FOX  HESITATES  147 

and  W.  F.  says:  "If  a  client  could  be  sure  that  he  was  really 
representing  him,  I  believe  the  client  would  be  adequately  repre- 
sented." 

The  trouble  with  Colonel  Hartfield  would  seem  to  have  been 
that  he  is  a  Wall  Street  lawyer,  and  all  those  big  lawyers  who 
were  fighting  W.  F.  were  his  bosom  friends,  and  those  big  banks 
and  investment  houses  which  were  trying  to  break  W,  F,  were  the 
kind  of  clients  he  had  always  had  in  the  past  and  expected  to  have 
in  the  future.  W,  F.  agreed  to  pay  him  a  million  dollars  if  he 
could  salvage  the  Fox  companies,  but  apparently  that  million 
dollars  didn't  look  as  big  to  Hartfield  as  it  looked  to  W.  F.  Says 
the  latter: 

"It  was  soon  apparent  that  Hartfield  was  distinctly  a  Wall 
Street  lawyer,  for  every  once  in  a  while  he  would  make  some  sort 
of  suggestion  that  would  appear  as  if  he  were  fighting  with  the 
Telephone  Company  and  Halsey,  Stuart.  I  called  this  fact  to  the 
attention  of  Mr.  Reass,  but  he  said  not  to  pay  any  attention  to  it ; 
that  that  was  just  a  habit  of  rehearsing  things  in  his  mind;  that 
he  was  a  man  who  would  stand  by  you;  that  he  had  great 
influence;  he  had  the  entree;  he  was  general  counsel  for  the 
Morgan  bank  known  as  the  Bankers  Trust  Company,  o&e  of  our 
large  banking  creditors." 

Each  day  W.  F.  became  more  suspicious,  and  less  satisfied 
with  his  high-priced  Wall  Street  lawyer.  There  was  so  much  at 
stake,  he  must  have  the  best  there  was.  So  he  consulted  with 
Reass  some  more,  and  demanded  to  know  who  was  the  greatest 
lawyer  in  America,  and  Reass  asked  what  he  thought  of  Charles 
Evans  Hughes.  This  was  about  two  months  prior  to  Hughes' 
appointment  as  Chief  Justice  of  the  United  States  Supreme 
Court.  Hughes  had  been  a  justice  of  that  court  for  six  years,  tip 
to  1916,  when  he  had  resigned  to  become  the  Republican  candi- 
date for  president  against  Woodrow  Wilson.  He  had  been  Secre- 
tary of  State  m  the  cabinets  of  Harding  and  Coolidge.  For  the 
past  four  years  he  had  been  practicing  law  in  New  York,  and  to 
such  a  loyal  Republican  (in  national  affairs)  as  W.  Fv  he  would 
naturally  seem  one  of  the  most  august  and  impressive  persons  in 
the  world. 

But  even  so,  W.  F.  wanted  to  make  certain.  He  insisted  that 
his  friend  Reass  should  make  a  complete  list  of  all  the  banks  and 


148     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

bankers  and  banking  houses  and  corporations  which  he  now 
believed  were  allied  to  destroy  him.  Reass  took  that  list  to 
Hughes,  and  Hughes  went  over  it  and  said  there  was  no  name 
upon  it  which  would  make  it  impossible  for  him  to  accept  a 
retainer.  Reass  said  that  Hughes  wanted  to  see  W.  F. ;  and  when 
Hartfield  was  told  about  it,  Hartfield  said  that  was  all  right,  so 
W.  F.  went  to  see  Hughes. 

"On  the  morning  of  Monday,  November  25th,  I  called  on  Mr. 
Hughes  and  gave  him  a  complete  recital  of  everything  that 
involved  my  companies ;  the  episodes  beginning  with  the  seeking 
of  the  approval  of  the  Department  of  Justice  and  the  acquisition 
of  the  Loew  shares,  until  the  day  I  appeared  before  him.  I  was 
confined  with  him  in  his  room  for  more  than  three  hours.  He 
was  as  vitally  interested  in  my  recital  as  you  have  been.  When 
I  concluded,  he  extended  his  hand  and  the  palm  of  it  was  wet 
with  perspiration.  I  felt  a  grip  of  friendship.  He  asked  me  to 
dismiss  the  matter  from  my  mind,  and  indicated  that  he  had 
broad  shoulders,  and  was  willing  to  have  this  burden  placed  upon 
his  shoulders." 

Nothing  could  exceed  the  relief  of  W.  F.  at  this  development 
in  his  affairs.  At  last  he  had  a  real  friend,  and  a  real  supporter. 
The  greatest  lawyer  in  the  United  States  had  taken  charge  of 
his  destiny:  Charles  Evans  Hughes,  ardent  reformer  and  enemy 
of  corruption  and  crime;  for  two  terms  Governor  of  New  York 
state  on  a  reform  ticket;  for  six  years  a  justice  of  the  United 
States  Supreme  Court;  for  four  years  Secretary  of  State  of 
the  United  States;  holder  of  twenty-one  college  degrees,  and 
for  the  sixty-seven  years  of  his  life  a  member  of  the  Baptist 
Church. 

Judge  Hughes  spent  some  time  in  telling  W.  F.  of  the  great 
disputes  he  had  had  to  settle  and  the  great  tangles  he  had  had  to 
resolve  in  the  course  of  his  career:  all  the  things  he  had  been 
obliged  to  da  when  he  was  Secretary  of  State  of  the  United 
States.  He  had  had  to  settle  great  wars,  one  in  particular 
between  China  and  Japan.  Surely  W.  F.  could  believe  that  a 
man  who  had  settled  a  war  between  China  and  Japan  would  be 
able  to  settle  a  war  between  William  Fox  and  the  Telephone 
Company,  the  Chase  National  Bank,  and  Halsey,  Stuart !  W,  F. 
said  to  his  new  friend : 


THE  FQX  HESITATES  149 

"  'Mr.  Hughes,  from  October  28  until  today  I  have  had  an 
average  of  no  more  than  two  hours  sleep  a  night.  My  brain  is 
so  tired,  I  can't  think  any  more.  I  don't  seem  to  be  able  to  go 
any  further/  To  this  Hughes  said  not  to  worry,  that  from  now 
on  he  was  going  to  do  the  thinking  for  me.  He  said  he  could 
imagine  me  being  tired ;  who  wouldn't  be  tired,  going  through  a 
thing  like  this? 

"I  couldn't  think ;  I  was  worn  out.  I  had  not  only  my  busi- 
ness troubles,  but  I  had  illness  at  home.  Mrs.  Fox  was  confined 
to  her  bed  at  our  country  home  throughout  the  whole  period. 
I  couldn't  go  to  that  home,  and  I  didn't  dare  talk  over  the  tele- 
phone, because  I  believed  that  every  word  I  uttered  was  being 
listened  to.  At  no  previous  time  during  my  career,  if  I  was 
within  a  hundred  miles  of  New  York,  did  I  fail  to  take  the  train 
and  sleep  in  my  own  home.  But  now  I  couldn't  go.  Now  I  was 
just  a  pathetic  old  man.  I  was  fifty  years  older  than  my  years. 
I  am  sure  that  if  my  health  is  spared  until  I  am  a  century  old,  I 
shall  never  feel  as  old  as  I  did  then.  It  was  because  of  that  that 
Hughes  took  my  challenge  and  said,  'Let  me  think  for  you.' " 

W.  F.  went  to  his  hotel  and  had  a  little  sleep  on  the  strength 
of  this  new-found  security,  and  then  next  day  he  went  to  his 
office,  intending  to  go  from  there  to  another  conference  with 
Judge  Hughes.  But  in  his  office  a  strange  bit  of  news  was 
brought  to  him.  The  Jones  ticker  had  just  issued  a  statement 
to  the  effect  that  the  United  States  Government  had  begun  an 
action  against  William  Fox,  Fox  Theatres,  and  Fox  Film,  requir- 
ing them  to  divest  themselves  of  the  Loew  shares. 

What  a  strange  thing!  These  shares  had  been  acquired  in 
February,  and  it  was  now  the  beginning  of  December,  gnd  in  all 
that  time  no  legal  action  had  been  begun  by  the  Government. 
The  last  that  W.  F,  had  heard  about  the  matter  was  the  message 
brought  by  his  friend,  Colonel  Huston,  treasurer  of  the  Repub- 
lican National  Committee,  to  the  effect  that  the  Government 
would  be  satisfied  with  W.  F/s  plans  provided  that  the  Loew 
contract  with  Paramount  would  be  abrogated.  But  now  here 
were  the  legal  representatives  of  the  United  States  Government 
filing  a  suit  against  the  Fox  Theatres  Corporation,  and  so  soon 
after  William  Fox  had  told  all  the  details  of  his  affairs  to  Charles 
Evans  Hughes.  A  most  singular  sequence  of  events — the  full 


150     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

singularity  of  which  you  cannot  appreciate  until  you  are  reminded 
of  one  fact :  that  the  name  of  the  Solicitor  General  of  the  United 
States  Government  at  the  time  was  Charles  Evans  Hughes, 

JtmWhat  was  our  friend  Fox  to  make  of  this  astounding  develop- 
ment? Was  he  to  consider  it  a  pure  coincidence,  one  of  those 
amazing  coincidences  which  do  happen  sometimes  in  the  affairs 
of  men?  Or  was  he  to  figure  that  there  had  been  a  flash  of 
telepathy  between  the  elder  Hughes  in  New  York  and  the  younger 
Hughes  in  Washington?  Or  could  it  be  that  this  flash  had 
traveled,  not  by  telepathy,  but  by  the  wires  of  the  American 
Telephone  and  Telegraph  Company? 

The  confidences  between  a  lawyer  and  a  client  are  supposed 
to  be  as  sacred  as  those  between  a  Catholic  confessor  and  a 
penitent.  But  also,  of  course,  the  ties  between  a  father  and  a  son 
are  often  very  close ;  and  what  would  be  the  reaction  of  a  devoted 
father  who  suddenly  got  news  that  his  son  was  on  the  point  of 
being  involved  in  a  serious  scandal?  Can  we  imagine  that  a  tele- 
phone connection  was  established  between  the  law  office^  of 
Hughes,  Schunnan  &  Dwight  in  New  York  and  the  Solicitor 
General's  office  in  Washington,  and  that  words  something  like 
the  following  were  spoken  over  that  telephone  line : 

"Charlie,  I  have  just  received  some  information^  about  the 
case  of  Fox  Theatres  Corporation  and  its  purchase  of  a  majority 
of  the  shares  of  Loew's,  Inc.  There  may  be  a  court  fight  between 
Fox  and  his  creditors  any  day,  and  it  is  certain  to  make  a  dis- 
agreeable story  in  the  newspapers.  It  appears  that  the  Govern- 
ment is  in  a  ticklish  position  in  the  matter,  because  Fox  offered 
$2,000,000  to  influence  the  Department  of  Justice  to  consent  to 
the  merger  of  Loew's  with  the  Fox  companies.  The  Govern- 
ment was  threatening  an  action  last  July,  but  it  hasn't  taken  any 
action,  ^nd  if  this  story  should  come  out,  it  will  be  the  general 
assumption  that  someone  in  the  Department  has  been  influenced. 
I  don't  want  to  see  your  name  involved  in  a  scandal  of  that  sort, 
and  in  order  to  keep  yourself  safe,  I  think  you  should  bring  an 
action  against  the  Fox  companies  without  a,  moment's  delay/* 

Could  any  such  conversation  have  taken  place?  W.  F.  was 
suspicions  about  it  at  the  time,  and  he  is  still  more  suspicious 
about  it  now.  You  will  not  be  interested  in  any  speculations  of 


THE  FOX  HESITATES  151 

mine  on  the  subject,  but  you  may  be  interested  in  some  facts 
which  for  the  past  twenty-seven  years  have  conditioned  my  think- 
ing about  Charles  Evans  Hughes. 

It  happened  that  during  the  revelations  of  life  insurance  cor- 
ruption which  took  place  in  1905,  I  was  a  good  friend  of  James 
B.  Dill,  author  of  "Dill  on  Corporations/'  at  that  time  the  highest 
paid  corporation  lawyer  in  New  York,  and  an  "insider"  on  all 
the  big  deals  of  the  timie.  Dill  had  just  been  appointed  a  judge 
of  the  Court  of  Appeals  of  the  State  of  New  Jersey,  the  highest 
court  in  that  state.  But  in  spite  of  that  fact,  he  was  the  freest 
talker  I  have  ever  known.  He  told  me  the  insides  of  New  York 
finance  and  politics  of  those  days,  and  a  great  part  of  the  material 
of  "The  Metropolis"  and  "The  Moneychangers"  came  from  him, 
and  all  my  later  books  have  been  colored  by  his  revelations. 
From  him  I  learned  that  perjury  and  jury-bribing,  wire-tapping, 
burglary,  arson  and  even  murder,  are  part  of  American  big  busi- 
ness technique,  and  that  nothing  you  could  make  up  for  a 
melodrama  or  a  movie  would  be  as  "raw"  as  the  reality  of  Wall 
Street. 

It  so  happened  that  the  enormous  funds  of  the  life  insurance 
companies  were  in  the  hands  of  "irresponsible"  men — which 
meant,  in  those  days,  men  who  were  not  responsible  to  the  elder 
Morgan,  One  of  them  was  "Jimmie"  Hyde,  who  spent  a  lot  of 
money  on  chorus  girls,  which  made  him  vulnerable  in  the  news- 
papers. Morgan  wanted  the  control  of  those  funds,  so  he  fed  the 
life  insurance  scandals  to  the  New  York  newspapers  and  thus 
forced  an  investigation  by  the  State  Legislature.  The  man  whom 
Morgan  employed  as  his  attorney  to  do  this  job  was  Dili  Morgan 
had  previously  paid  him  $1,000,000  to  organize  the  Steel  Trust, 
and  make  it  law  tight.  (Morgan  said,  "I  don't  employ  lawyers  to 
tell  me  what  I  can't  do.  I  employ  them  to  tell  me  how  to  do  what 
I  want  to  do.") 

Twice  every  day,  early  in  the  morning  and  late  in  the  after- 
noon, the  reporters  for  the  New  York  newspapers  came  to  the 
office  of  Dill,  and  got  their  latest  supply  of  inside  information 
about  chorus  girls  and  other  breaches  of  trust  And  sometimes 
I  had  the  privilege  of  being  in  the  office,  and  of  staying  after  the 
reporters  had  left,  and  hearing  inside  stories  about  the  news- 
papers. Not  long  ago  some  person  writing  in  sorue  "kept"  maga- 


152     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

zine  challenged  the  truth  of  my  statements  about  Dill,  and  I 
took  the  precaution  to  get  a  letter  of  support  from  Lincoln  Stef- 
fens,  who  also  was  one  of  Dill's  confidants,  and  has  told  a  good 
deal  about  Dill  in  his  autobiography.  I  submitted  this  manu- 
script to  Steffens,  and  he  writes :  'The  impression  you  give  of 
Hughes  is  the  impression  I  have  long  had."  And  further :  "So 
with  Dill,  what  you  give  bears  out  very  really  my  picture  of  that 
little  genius.  What  a  man!" 

The  Republican  party  machine  in  the  New  York  Legislature, 
of  course  under  the  direction  of  Morgan's  lawyer,  Judge  Dill, 
employed  a  high-class  and  upright  Baptist  lawyer  to  act  as  counsel 
for  the  legislative  committee  investigating  the  abuse  of  life 
insurance  funds.  The  name  of  that  lawyer  is  Charles  Evans 
Hughes,  and  this  was  the  beginning  of  his  public  career.  His 
Incoming  Governor  of  New  York  State  for  two  terms  was  on  the 
l>asis  of  his  conduct  of  that  investigation.  And  here  is  the  crucial 
and  dominant  fact;  that  investigation  continued,  and  the  expos- 
ures were  kept  upon  the  front  page  of  the  newspapers,  up  to 
the  day  when  the  control  of  life  insurance  funds  was  taken  out 
of  the  hands  of  "Jimmie"  Hyde  and  other  "irresponsible"  persons, 
and  placed  in  the  hands  of  Morgan  and  of  Morgan's  bankers  and 
agents.  From  that  moment  the  publication  of  life  insurance 
scandals  ceased,  and  the  investigation  came  to  an  ead,  and  the 
public  has  heard  and  thought  no  more  about  the  matter.  The 
use  of  life  insurance  surpluses  to  further  stock  speculations  was 
ten  times  as  prevalent  in  1929  as  it  ever  had  been  in  1905,  and 
Charles  Evans  Hughes  knew  all  about  it,  but  if  you  had  used  a 
crowbar,  you  could  not  have  got  him  to  open  his  mouth  on  the 
subject. 


REEL  FOURTEEN 
THE  FOX  ENTERS 

ANOTHER  and  quite  curious  development  comes  at  this  point 
JLJL  of  my  story.  It  has  to  do  with  John  D.  Rockefeller,  jr.,  and 
I  have  to  go  back  and  tell  you  of  relationships  which  had  been 
established  between  our  subject  and  the  crown  prince  of  Amer- 
ican finance.  You  see,  our  little  Fox  has  a  kind  of  power  of  his 
own;  he  has  been  in  all  sorts  of  unexpected  places,  and  met  the 
greatest  in  our  land,  and  found  occasions  when  he  could  be  of 
service  to  them. 

The  story  takes  us  back  a  matter  of  twelve  years.  America 
is  at  war,  and  W.  F.  is  enthusiastic  in  his  country's  cause,  and  is 
putting  all  sorts  of  patriotic  material  into  his  pictures  and  news- 
reels,  and  giving  most  of  his  time  to  raising  money  for  the  Red 
Cross.  He  has  told  me  a  number  of  stories  about  his  adventures, 
and  they  are  interesting  stories,  revealing  a  sense  of  drama,  and 
making  it  plain  why  he  was  such  a  success  as  a  creator  of  pic- 
tures for  the  masses.  He  has  repeated  several  of  the  speeches 
he  made  at  banquets  where  the  great  ones  of  the  land  had  come, 
and  a  little  Fox  was  selected  to  conjure  the  millions  out  of  their 
pockets.  He  really  did  get  the  millions — I  have  looked  up  the 
figures  In  the  newspaper  files  of  that  time! 

In  the  spring  of  1918,  W.  F.  was  at  White  Sulphur  Springs 
in  Virginia  with  his  family,  and  he  read  in  the  New  York  paper 
that  the  Red  Cross  was  starting  a  "drive*5  of  twenty  teams.  They 
got  these  "drives"  up  in  military  style,  with  "captains"  of  the 
different  teams  and  a  "general"  over  them  all.  Morgan  was  one 
of  the  captains,  and  Rockefeller  was  one,  and  Schiif,  and  George 
Baker,  and  an  Astor  and  a  Gould — all  the  big  names  were  there. 
There  was  a  team  to  collect  money  from  the  banks,  and  one  from 
the  corporations,  and  so  on — but  no  team  for  the  theatrical 
people.  W.  F.  went  up  to  New  York  and  pointed  out  this  over- 

153 


154     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 


sight,  and  proposed  to  organize  the  "Allied  Theatrlca* 
Pictures  Team/'  Each  team  was  supposed  to  raise  $200,000. 
With  the  idea  of  frightening  Fox  away,  they  raised  the  demand 
to  $400000;  but  W.  F.'s  reply  was  that  the  Allied  Theatrical 
Motion  Pictures  Team  would  raise  $750,000.  He  offered  to  leave 
a  check  with  the  Red  Cross  for  the  full  amount,  and  let  them  take 
out  any  deficit  if  he  failed  in  his  job.  That  was  his  way  of  talk- 
ing. The  board  went  into  executive  session,  and  faced  the  fact 
that  if  it  added  a  twenty-first  team,  it  would  have  to  destroy  all 
its  printed  stationery.  It  voted  to  destroy  the  stationery. 

Nobody  was  allowed  to  start  work  until  after  breakfast  on 
Monday  morning.  There  was  a  gathering  of  captains  at  luncheon 
and  W,  F.  was  called  on  for  a  speech.  He  was  much  frightened, 
for  he  has  a  tremendous  respect  for  these  famous  financial  names 
—Morgan,  Rockefeller,  Schiff,  Baker,  Astor,  Gould.  However, 
he  made  a  speech,  in  his  direct  and  straightforward  way,  and 
explained  the  embarrassing  fact  that  theatrical  people  don't  get 
tip  In  the  morning,  and  so  this  luncheon  was  his  breakfast,  and 
all  the  money  he  had  to  report  was  $1  which  had  come  in  the 
mail,  sent  by  an  old  woman  who  said  it  was  half  of  everything 
she  owned  in  the  world. 

John  D.  Rockefeller,  jr.  also  made  a  speech,  and  explained 
that  he  also  had  the  habit  of  going  to  bed  and  getting  up  late. 
He  had  only  raised  $7,000  so  far,  but  he  pledged  himself  to 
report  at  least  that  much  every  day  in  the  future. 

The  drive  came  to  an  end,  and  it  seemed  to  W.  F.  that  the 
Rockefeller  family  was  being  badly  treated,  because  the  Rocke- 
feller Foundation's  large  contribution  could  not  be  credited  to  the 
Rockefellers  ;  it  was  given  by  a  corporation,  and  therefore  was 
credited  to  the  team  which  was  collecting  from  corporations.  So 
W.  F.  decided  that  it  was  his  duty  to  let  the  Rockefeller  team 
come  out  No.  1.  When  it  came  W.  F/s  alphabetical  turn  to 
report,  he  said  that  his  report  wasn't  ready  yet,  and  he  waited 
until  the  report  was  made  for  the  Rockefeller  team;  it  was 
$1,026,000.  There  were  tremendous  cheers  for  Rockefeller;  and 
then  W.  F,  got  up  and  reported  that  the  Allied  Theatrical  Motion 
Pictures  Team  had  obtained  contributions  from  75,000  persons, 
and  that  the  amount  totaled  $1,023,000.  As  a  matter  of  fact  the 
Allied  Motion  Pictures  team  had  raised  $1,100,000,  and  W.  F. 


THE  FOX  ENTERS  155 

sent  the  remaining  $77,000  to  the  Red  Cross  afterwards,  in  order 
that  the  Rockefeller  team  might  have  the  glory  of  being  No.  L 
Afterwards  W.  F.  received  a  letter  in  Rockefeller's  handwriting, 
congratulating  him  upon  his  achievement,  and  revealing  between 
the  lines  that  Rockefeller  had  some  idea  of  what  W.  F.  had  done. 

Just  before  the  end  of  the  war  came  another  drive,  and  this 
time  Rockefeller  was  the  "general."  I  will  let  W,  F,  tell  that 
story  in  his  own  words : 

"When  it  was  announced  that  this  drive  was  to  be  held,  I 
received  a  telephone  call.  The  voice  on  the  'phone  said,  'I  am 
Mr.  Rockefeller's  secretary,  and  he  would  like  to  know  when  it 
would  be  convenient  for  him  to  call  on  you/  I  told  him  to  let 
me  know  when  it  would  be  convenient  for  him  and  I  would  go 
to  his  office.  But  he  said,  'No,  Mr.  Rockefeller  says  that  this  is 
a  matter  that  concerns  him,  and  he  wants  to  call  on  you.  How 
would  11  o'clock  do  at  your  office  tomorrow  morning  ?r  I  said 
that  would  be  fine.  What  a  thrill !  The  richest  man  in  the  world 
calling  on  me  on  a  matter  that  concerns  him!  I  was  in  early 
next  morning  to  clean  up  my  desk  and  my  work  as  promptly  as 
I  knew  how.  I  left  word  with  the  girl  at  the  desk  that  when 
Mr.  Rockefeller  came,  to  come  and  knock  three  times  on  my 
door,  and  then  show  Mr.  Rockefeller  in — all  this  so  I  would 
know  it  was  he,  and  so  that  his  name  would  not  be  spoken  and  no 
fuss  made. 

"I  waited  for  him  in  my  office.  I  watched  the  clock,  and 
when  it  got  within  about  three  minutes  to  11  o'clock,  I  had  an 
idea  that  I  had  made  the  wrong  arrangements.  My  door  should 
be  wide  open.  As  I  opened  my  door,  there  he  was  sitting  among 
the  other  people  and  salesmen  waiting  in  my  office.  I  asked  him 
to  please  step  in.  He  said  he  had  come  a  little  early/' 

There  were  some  negotiations,  in  the  course  of  which  the 
great  Rockefeller  paid  another  visit.  W.  F.  became  one  of  his 
"captains,"  and  he  saw  to  it  that  the  outcome  was  the  same  as 
before ;  the  Rockefeller  team  was  first,  and  the  Fox  team  was 
second.  There  is  yet  another  story,  which  W.  F.  shall  tell  m 
his  own  way: 

"Some  years  later  I  read  in  the  newspaper  that  John  D. 
Rockefeller  with  his  wife  and  Rockefeller,  jr.,  were  going  to 
China  to  dedicate  a  medical  college.  Having  met  him  as  I  had 


156     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

during  the  war  days,  I  had  great  admiration  for  him,  and  felt 
that  if  he  was  going  to  China  to  dedicate  a  hospital,  a  permanent 
record  of  it  ought  to  be  made,  and  without  his  knowledge.  In  fact 
I  was  quite  sure  that  if  he  knew  about  it  he  would  object  There- 
fore, the  day  they  left  their  home,  he  didn't  know  there  was  a 
camera  concealed  in  a  wagon  across  the  street,  and  we  photo- 
graphed him  as  he  left;  he  didn't  know  when  he  got  off  in  the 
Grand  Central  Station  there  was  a  camera  at  hand;  he  didn't 
know  we  had  cameras  in  the  station  and  near  the  platform.  He 
didn't  know  when  he  boarded  the  boat  to  go  to  China  that  our 
cameras  were  photographing  him.  A  morning  or  two  later  he  did 
know  that  a  man  with  a  camera  was  trying  to  take  pictures  of 
him.  On  questioning  the  man,  what  he  was  trying  to  do,  and 
upon  the  man  replying  that  he  was  ordered  to  take  as  many 
pictures  of  him  as  he  could,  Rockefeller  replied,  'Don't  you  dare 
take  any  pictures.  If  you  do  that  I  will  have  you  thrown  off  the 
boat/  The  young  man  replied,  If  you  throw  me  off  the  boat,  I 
am  a  good  swimmer,  and  I  would  still  continue  taking  pictures. 
My  assignment  comes  from  Fox;  I  am  supposed  to  photograph 
anything  of  interest.' 

"And  we  did  photograph.  He  and  the  cameraman  became 
very  friendly,  and  he  let  us  take  our  pictures.  We  photographed 
the  dedication  of  this  hospital  and  him  receiving  a  degree  of 
doctor.  We  photographed  them  coming  home,  a  few  days  before 
Christmas.  When  the  pictures  were  developed,  I  called  up  Rocke- 
feller's secretary  and  said,  'We  have  made  the  most  beautiful 
pictures  of  Mr.  Rockefeller's  trip.  Don't  you  think  he  would  be 
interested  to  show  these  pictures  to  his  children?'  The  secretary- 
called  me  back  and  said  by  all  means  he  wanted  to  show  them  to 
his  children,  and  he  had  selected  the  next  evening,  Christmas 
Eve,  to  show  them.  We  set  up  a  machine  in  their  little  private 
church,  and  my  operator  tells  me  those  children  cheered  and 
madt  just  as  much  noise  in  the  joy  of  seeing  their  parents  as 
any  other  children  would  have  done.  I  then  suggested  that  Mr. 
Rockefeller  would  receive  as  a  gift  a  set  of  these  films,  and  asked 
if  there  would  be  any  objection  to  our  using  some  of  the  scenes 
for  news  items.  He  accepted  a  set  of  these  pictures,  and  we  did 
use  many  of  the  items  in  our  newsreels  later.  We  had  spent 
several  thousands  of  dollars  in  photographing  these  people." 


THE  FOX  ENTERS  157 

Now  the  time  had  come  when  W.  F.  had  to  claim  a  return 
for  these  favors.  He  wrote  a  polite  note  to  John  D.  Rockefeller, 
jr.,  saying  that  he  asked  for  a  brief  interview  in  order  to  obtain 
Rockefeller's  advice  about  his  affairs.  In  reply  he  received  a  cold 
and  formal  note  informing  him  that  "for  many  years  we  have 
confined  ourselves  in  our  investments  to  certain  classes  of  enter- 
prises, with  which  we  are  more  or  less  familiar,  and  with  which 
it  is  relatively  easy  for  us  to  keep  in  touch."  I  have  had  the 
privilege  of  inspecting  the  original  of  this  letter,  and  saw  the 
signature  of  John  D.  Rockefeller,  jr.,  for  the  first  time;  I  was 
interested  to  note  that  it  is  a  signature  which  would  be  duplicated 
by  a  majority  of  the  children  in  any  grammar  school  in  the  United 
States.  A  curious  thing,  that  this  immature  bit  of  handwriting 
should  be  the  most  powerful  bit  that  you  could  find  anywhere  in 
the  whole  world! 

W.  F.  wrote  again,  explaining  politely  that  he  had  not  asked 
Rockefeller  for  any  money,  and  had  not  intended  to  ask  for  any. 
Again  he  asked  very  humbly  that  he  might  have  a  few  minutes 
of  Rockefeller's  time. 

Of  course,  what  W.  F.  wanted  was  obvious  enough.  The 
Chase  National  Bank  is  a  Rockefeller  institution,  and  if  he  could 
have  gained  Rockefeller's  ear  and  won  his  sympathy,  he  wouldw 
have  had  to  have  only  three  words  written  to  Albert  H.  Wiggin, 
three  words  followed  by  that  child's  signature:  "Lay  off  Fox. 
John  D.  Rockefeller,  jr." — and  all  of  W.  F/s  troubles  would  Save 
been  over,  and  I  should  not  have  been  writing  this  book. 

But  Rockefeller  knew  exactly  what  W,  F.  wanted,  and  didn't 
intend  to  lend  his  ear  and  have  his  feelings  harrowed.  Princes 
and  potentates  cannot  do  that  sort  of  thing.  If  every  time  a 
prisoner  of  war  was  marked  for  execution,  he  was  allowed  to 
make  personal  appeal  to  the  commanding  general,  what  would 
become  of  the  general's  peace  of  mind,  and  where  would  be  the 
fun  of  a  military  career? 

"Young  John,"  as  he  is  known  in  Wall  Street,  wrote  advising- 
W.  F.  to  consult  his  brother-in-law,  Winthrop  Aldrich,  who  then 
was  president  of  the  Equitable  Trust  Company,  and  now  is  presi- 
dent of  the  Chase  Bank,  since  the  merger  of  these  two  institu- 
tions. Which  brings  us  back  to  take  up  the  thread  of  our  story 
in  the  office  of  the  law  firm  of  Hughes,  Schurman  &  Dwight 


158     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

For  W  F  told  Hughes  that  he  had  written  to  Rockefeller,  and 
when  the  reply  from  Rockefeller  came,  he  took  it  to  Hughes  and 

asked  Hughes'  advice.  A1J  .  «       *      ^  s 

"Hughes  looked  at  the  name  of  Aldnch  and  said  for  me  not 
to  keep  that  appointment.  He  said:  'You  know  Rockefeller  is  a 
Baptist  and  so  am  I,  and  we  Baptists  stick  together  and  under- 
stand each  other.  If  he  wanted  to  help  you,  he  would  have  sent 

you  to  Mr, .  He  is  the  yes  man.  But  Rockefeller  has  sent 

you  to  the  no  man.  You  will  just  be  wasting  your  time/  " 

Unfortunately  W.  F.  has  forgotten  the  name  of  _the  yes 
man/*  an  item  of  information  which  would  have  greatly  increased 
the  sales  of  this  book  in  Wall  Street? 

W.  F.  took  the  advice  of  his  great  new  lawyer  and  did  not 
go  to  see  Winthrop  Aldrich.  He  was  in  that  terrible  state  of 
exhaustion  where  he  could  not  think  for  himself.  But  now  he 
looks  back  upon  it  all  and  wonders,  did  Hughes  really  know  that 
Aldrich  was  the  "no  man"  and  not  the  "yes  man/*  and  what 
would  have  happened  if  W.  F.  had  gone  to  see  Aldrich  and  told 
Aldrich  his  troubles?  Would  Aldrich  have  written  the  three 
magic  words?  Would  Aldrich  have  said:  "The  Equitable  Trust 
will  furnish  the  money  and  save  these  two  prosperous  companies 
from  destruction?" 

W,  F.  does  not  know,  and  never  will  know;  it  is  one  of 
the  riddles  with  which  you,  the  reader,  are  left  to  amuse 

yourself. 

But  meanwhile  here  is  our  Fox,  hesitating  in  front  of  the 
trap,  trying  to  decide  whether  to  enter  or  to  run  away.  He  has 
put  himself  into  the  hands  of  his  great  lawyer,  and  his  great 
lawyer  soothes  and  comforts  him.  Everything  is  all  right.  The 
action  of  the  Government  was  a  coincidence,  and  that  matter 
can  be  attended  to.  As  for  the  Telephone  Company,  there  is 
surely  nothing  to  worry  about  there.  The  great  lawyer  under- 
stands the  Telephone  Company.  He  has  represented  it  many 
times,  and  knows  Gifford,  the  president,  very  well.  But  W.  F. 
need  not  be  troubled  about  this  intimacy;  Hughes  has  been  on 
bath  sides,  for  them  and  against  them.  -He  thinks  there  is  a 
basis  on  which  an  adjustment  can  be  made,  both  with  the  Tele- 
phone Company  and  with  Halsey,  Stuart.  Their  demand  for 
powers  of  attorney  is  unjustified,  but  their  proposition  can  be 


THE  FOX  ENTERS  159 

modified,  and  by  means  of  a  voting  trusteeship  the  matter  can 
be  worked  out  and  all  dangers  eliminated. 

The  Fox  has  to  make  up  his  mind  quickly,  for  new  troubles 
are  gathering  like  storm  clouds  over  his  head.  His  English  notes 
are  coming  due,  and  he  is  in  danger  of  losing  the  whole  Gaumont 
purchase.  There  are  notes  due  at  the  banks  in  New  York ;  and 
above  all,  there  are  those  Loew  shares  in  the  hands  of  the  brokers. 
The  contract  with  the  brokers  provides  that  they  are  to  hold 
these  shares  until  December  31,  but  only  on  condition  that  W.  F. 
can  keep  a  margin  of  35  per  cent.  If  the  shares  go  below  a  cer- 
tain point,  the  brokers  are  free  of  their  agreement;  and  if  any 
one  batch  is  thrown  upon  the  market,  then  all  the  shares  are 
gone. 

At  this  time  Wall  Street  was  full  of  rumors  of  impending- 
collapse  of  Fox  Film  and  Fox  Theatres.  This  is  a  regular  part 
of  the  system;  when  a  concern  is  to  be  raided  and  destroyed, 
these  rumors  appear  magically  and  spread  like  wildfire.  There 
are  innumerable  "dope  sheets'*  which  publish  them,  and  if  you 
are  willing  to  put  up  the  price,  you  can  have  anything  published 
you  want.  As  I  am  writing  this  book,  there  are  exposures  in 
Congress  from  which  it  appears  that  not  merely  do  the  scandal 
sheets  take  bribes,  but  the  financial  writers  of  the  biggest  and 
most  respectable  New  York  newspapers  take  bribes.  And,  of 
course,  if  the  men  who  desire  to  beat  down  a  certain  stock  are 
in  position  to  have  inside  information  as  to  a  compan/s  business, 
it  is  an  easy  matter  for  them  to  prepare  tricky  statements,  and 
make  the  soundest  company  in  the  world  appear  to  be  on  the 
verge  of  ruin.  How  could  the  little  investors  all  over  the  country 
who  had  put  their  trust  in  Fox  and  his  companies,  understand 
that  his  difficulties  were  due,  not  to  the  fact  that  he  had  managed 
his  companies  badly,  but  to  the  fact  that  he  had  managed  them 
too  well  ?  They  were  so  prosperous  that  greedy  men  had  banded 
together  to  take  them  away  from  him. 

If  anyone  were  trying  to  force  the  Fox  into  the  trap,  what 
would  he  have  done?  One  thing,  to  force  down  the  price  of 
the  Loew  shares !  Who  was  doing  it,  W.  F.  never  found  out, 
but  a  friend  of  his,  an  insider  in  Wall  Street,  brought  him  the 
news  that  a  pool  had  been  organized,  and  a  raid  on  Loew's  was 
to  begin  on  Monday  morning.  The  tip  reached  W.  F.  on  Friday, 
12 


160     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

and  he  set  out  in  desperation  to  find  som£  one  who  would  protect 
the  stock.  He  had  the  printed  balance  sheet  of  the  company, 
showing  how  far  below  value  the  stock  was  selling.  Loew's, 
Incorporated,  was  not  involved  in  any  of  W.  F.'s  troubles;  it 
had  more  than  $10,000,000  cash  on  hand,  and  its  statement  at 
the  close  of  the  last  fiscal  year  showed  it  had  earned  more  than 
$10,000,000— the  largest  profit  in  its  history. 

W.  F.  went  to  see  Felix  Warburg,  one  of  the  senior  partners 
of  Kuhn,  Loeb  &  Company.  Mr.  Warburg  had  the  money,  and 
W.  F.  had  been  intimate  with  him  during  the  war  drives,  and 
had  had  many  assurances  of  his  regard.  Here  was  a  stock  which 
was  selling  at  $40  a  share,  and  was  going  to  earn  $11  a  share 
during  the  coming  year;  its  true  market  value  therefore  was 
$110.  If  Warburg  would  place  an  order  for  S03000  shares  of 
this  stock,  he  would  save  W.  F.,  and  incidentally  make  an  enor- 
mous profit  But  he  refused,  and  others  likewise  refused.  What 
they  lost  by  their  refusal  is  evident  from  the  figures.  The  Loew 
shares  on  April  1  were  at  70  and  on  May  1  at  76.  In  the  summer 
they  reached  the  high  mark  of  95. 

W.  F.  was  trying  to  borrow  money,  so  as  to  protect  the  shares 
himself.  He  thought  of  the  Eastman  Kodak  Company,  from 
which  Fox  Film  was  purchasing  enormous  quantities  of  sup- 
plies. He  went  to  the  selling  agent  of  that  company,  and  told 
his  troubles,  and  the  agent  agreed  to  leave  for  Rochester  that 
night  and  see  the  executives  of  his  company.  Saturday  was  a 
short  banking  day,  and  he  could  hardly  raise  any  money  before 
noontime,  but  he  would  spend  all  day  Saturday  and  if  necessary 
all  day  Sunday  with  the  Eastman  executives,  and  do  his  best  to 
have  some  cash  in  W.  F/s  hands  before  10  o'clock  Monday 
morning. 

Thegyjj^^  that  JV^all 

Stc^e!  md  not  want  any  money  loaned  to  Fox.  He  was  asking 
for  ^5W,<3007^^'inJQrderJt6Jmake  it  easier*"" for  them,  he  sug- 
gested that  they  purchase  Loew  shares,  and  give  Fox  Film  the 
privilege  of  repurchasing  these  shares  within  twelve  months  at 
cost  plus  interest  Loew's  was  likewise  a  heavy  purchaser  of 
Eastman  films,  and  this  subterfuge  would  look  plausible. 

On  Friday  evening  W.  F.  had  a  distinguished  caller — none 
other  than  Will  H.  Hays,  head  of  the  Allied  Motion  Picture 


THE  FOX  ENTERS  161 

Producers'  Association.  This  makes  it  necessary  for  us  to  go 
back  again  in  our  story,  and  see  what  had  been  the  dealings  of 
W.  F.  with  this  well-advertised  gentleman. 

Will  Hays  had  been  national  chairman  of  the  Harding  cam- 
paign, and  W.  F.  had  learned  to  know  him  well  at  this  time. 
After  the  campaign,  W.  F.  told  Hays  he  was  wasting  his  valuable 
talents  on  politics.  W.  F.  was  building  up  a  great  corporation, 
and  he  invited  Hays  to  become  one  of  its  executives.  But  Hays 
answered  that  he  expected  to  become  a  member  of  the  Harding 
cabinet.  W.  F.  inquired  as  to  whether  he  would  be  able  to  live 
on  that  meager  salary.  Hays  replied  that  he  was  not  financially 
independent,  but  still  he  wanted  to  become  a  member  of  the 
cabinet. 

He  became  Postmaster-General,  and,  as  you  know,  got  his 
hands  badly  smeared  with  oil.  This  was  embarrassing  to  W.  F., 
who  thought  he  ought  to  help  his  friend  to  get  out  of  that  mess. 
Just  then  it  was  necessary  to  form  an  association  of  the  motion 
picture  producers  and  distributors,  for  the  purpose  of  avoiding 
Government  censorship  of  their  product,  and  W.  F.  urged  that 
some  outstanding  man  in  the  Republican  party  should  be  put  in 
charge.  He  was  asked  to  suggest  a  list  of  men,  and  he  put  the 
name  of  Will  Hays  at  the  top.  As  a  result,  Hays  got  the  job, 
with  a  salary  of  $100,000  a  year — which  was  $25,000  more  than 
President  Harding  was  getting.  A  little  later  his  salary  was 
raised  to  $250,000  per  year.  For  this  increase  W.  F.  was  directly 
responsible ;  and  naturally,  therefore,  he  thought  that  Will  Hays 
was  his  friend. 

Three  times  during  this  long  ordeal,  the  eminent  Will  Hays 
came  to  call  upon  his  tortured  friend,  Will  Fox,  and  each  time 
he  came  with  one  purpose :  he  knew  a  man  who  would  be  willing 
to  buy  the  voting  shares,  and  he  urged  his  friend  to  sell  them  to 
this  person.  In  the  old  days,  Fox  had  told  Hays  of  his  ambition 
to  manage  the  greatest  moving  picture  organization  in  the  world, 
and  Hays  had  told  Fox  that  he  had  a  right  to  that  ambition ;  Hays 
had  met  and  knew  intimately  all  the  heads  of  all  the  motion  pic- 
ture companies,  and  no  one  among  them  was  better  qualified 
than  Fox.  But  now,  evidently,  Hays  had  changed  his  mind  as 
to  who  was  the  best  qualified  person.  He  had  found  a  man  who 
was  better  qualified  than  W.  F.  This  mysterious  person  wanted 


162     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

to  buy  the  shares  on  one  condition— that  Fox  would  state  his  price 
to  Hays  confidentially,  and  the  unnamed  man  would  promptly 
say  yes  or  no.  Fox  asked  many  questions,  and  after  a  while 
was  able  to  discover  the  name  of  this  mysterious  person:  Harley 
L.  Clarke  of  Chicago!  ^ 

W.  F.  began  to  see  the  cat  in  the  picture.  Will  Hays  was 
no  stranger  to  Harley  L.  Clarke.  Hays  was  an  intimate  friend 
of  Senator  Watson— the  two  of  them  ran  the  politics  of  Indiana, 
and  Watson  was  Clarke's  political  man.  So  Clarke  was  ^sure 
that  he  could  merge  Fox  and  Loew— and  Paramount  too,  if  he 
wanted  to.  Clarke  had  his  political  man  in  Washington^  and 
he  had  a  big  financial  man  in  New  York,  Albert  EL  Wiggin  of 
the  Chase  National  Bank  and  the  Chase  Securities  Company, 
Could  it  be  that  Clarke  and  Wiggin  had  organized  a  raid  on 
the  Loew  shares  for  Monday  morning,  and  then  had  sent  Will 
Hays  to  interview  the  harassed  Fox  on  Friday  evening? 

Traps  on  every  side  of  him,  and  no  way  of  escape!  Perhaps 
it  would  be  just  as  well  to  sell  out,  and  end  his  troubles  once 
and  for  all !  Let  W.  F«  tell  this  extraordinary  story  in  his  own 
words: 

"I  gave  Hays  the  price  that  night.  I  told  him  -mat  before 
the  crash  Clarke  once  inquired  if  my  voting  shares  were  for 
sale,  and  I  told  him  then  that  I  had  no  intention  of  selling  them, 
but  if  I  were,  the  price  would  be  $100,000,000.  In  view  of  the 
difficulty  I  was  in  now,  I  would  change  that  price  and  take  a 
third  of  $100,000,000. 

"The  next  day,  Saturday,  Clarke  telephoned  me  from  Chicago. 
He  said  that  price  was  all  right;  he  would  pay  me  a  third  of 
$100,000,000.  'I  will  come  to  New  York  on  Monday  and  con- 
summate the  transaction  with  you/  I  said  I  was  sorry,  but  I 
didn't  know  whether  this  thing  would  hold  until  Monday.  I  said, 
'I  am  in  more  serious  trouble  now  than  you  know' — that  is,  I 
thought  fee  didn't  know.  He  asked  me  what  the  trouble  was.  I 
said :  1  am  told  there  is  going  to  be  a  raid  on  the  Loew  shares 
on  Monday  morning  at  10  o'clock,  and  I  need  enough  money  to 
lift  these  Loew  shares  out  of  the  hands  of  the  brokers.  First 
my  enemies  will  raid  the  shares  to  make  the  brokers  throw  them 
over,  and  then  the  banks  will  have  to  throw  them  over.  That 
will  be  total  destruction  to  the  Fox  companies,  Now  you  are 


THE  FOX  ENTERS  163 

talking  about  friendship,  you  can  prove  that  you  are  buying  me 
out  just  to  be  of  service.  You  loan  the  company  the  sum  neces- 
sary to  lift  these  shares  out  of  the  brokers'  hands/ 

"He  said  all  right.  He  said  that  of  course  all  the  banks  were 
closed  now  and  wouldn't  open  until  Monday.  He  said,  'I  will 
have  an  official  of  Chase  Bank  call  on  you  tomorrow,  Sunday, 
and  give  you  a  written  communication  indicating  that  there  will 
be  $6,500,000  to  your  credit  on  Monday  morning  when  the  bank 
opens/  I  told  him  it  happened  that  Richard  Dwight,  Judge 
Hughes'  partner,  was  sitting  alongside  of  me  while  I  was  having 
this  conversation  with  him — would  he  please  repeat  to  Dwight 
what  he  had  just  said  to  me.  He  evidently  did  repeat  it,  for 
the  next  day,  Sunday,  Dwight  called  again  at  my  apartments  in 
the  hopes  of  meeting  this  executive  of  the  Chase  Bank* 

"Instead  the  telephone  rang  again :  Clarke  on  the  'phone  from 
Chicago.  He  had  changed  his  mind  about  doing  it  that  way. 
He  would  take  an  early  train  out  of  Chicago.  He  would  take  a 
train  immediately  after  he  hung  up  the  telephone,  a  train  that 
would  bring  him  to  New  York  at  9  o'clock — he  would  be  at  my 
apartment  at  9:15,  and  bring  with  him  the  certified  check  for 
$6,500,000.  This  check  would  be  certified  early  Moaoday 
morning  and  he  would  bring  it  to  my  hotel  and  be  there  at 
9:15. 

"In  the  meantime,  no  word  from  Rochester.  This  was  Sunday 
morning.  I  had  told  no  one  about  the  Rochester  deal,  No 
Chase  Bank  check  for  $6,500,000  from  Clarke.  Everybody  I 
knew  to  whom  I  could  possibly  go  for  financial  aid  was  exhausted, 
I  remembered  that  my  name  was  Fox,  and  I  remembered  reading 
somewhere  that  if  there  is  a  group  of  foxes  in  the  woods,  they 
are  all  good  friends.  If  one  of  them  happens  to  fall  and  break 
his  leg,  they  all  turn  around  and  devour  him.  Then  they  go 
on  and  are  good  friends  again." 

But  again  W.  F.  had  that  blind  trust  in  Providence.  He  did 
not  know  what  was  the  basis  of  his  assurance,  yet  he  felt  safe. 
"Somehow,  some  way,  I  didn't  know  where  from,  I  knew  that 
when  that  bell  rang  at  10  o'clock  Monday  morning,  there  would 
be  no  raid  on  those  shares.  ' 

"Monday  morning — 9:15.  Mr.  Dwight  at  my  offices  was 
waiting  for  Harley  Clarke.  I  watched  the  clock,  and  never 


164     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

saw  minutes  travel  so  fast.  Nine-thirty  and  no  Clarke,  I  'phoned 
to  the  New  York  Central  Station  to  see  if  the  train  was  late. 
No,  it  was  on  time— it  had  arrived  about  8 :4S.  Clarke  could 
have  walked  to  my  office  and  have  been  there  twenty  min- 
utes ago.  What  had  been  his  purpose  in  calling  me  on  the  'phone 
at  all?  What  had  been  Hays'  purpose?  Maybe  I  had  made  a 
mistake  when  I  told  him  there  would  be  a  raid  on  these  Loew 
shares.  I  could  close  my  eyes  and  see  the  New  York  Stock 
Exchange,  with  all  these  brokers  hustling  and  bustling,  taking 
their  positions  at  their  various  posts.  I  had  a  clear  vision  of  the 
bell  that  was  there.  Here  were  these  companies  which  I  had 
built,  the  result  of  an  effort  I  had  made  from  the  time  I  was 
five  years  old  until  now  when  I  reached  the  age  of  fifty-one — 
forty-six  years  of  building  and  constructing,  all  of  which  was 
going  to  be  destroyed  at  the  stroke  of  10.  Nine-forty-five,  9 :50, 
9:51,  9:52,  9:53,  9:54— and  the  telephone  rang  at  exactly  9:55, 
the  agent  of  the  Eastman  Kodak  Company  calling  from  Roches- 
ter, and  saying  'There  is  placed  to  your  credit  $6,300,000  at  the 
Bankers  Trust  in  New  York/ 

"There  He  was!  There  was  this  God  Almighty  of  mine, 
saving  me  again!  Now  it  was  necessary  to  'phone  thirteen 
brokers:  'Suckers,  deliver  those  shares  to  the  Bankers  Trust/ 
They  were  no  longer  the  brokers'  property.  A  half  dozen  of 
our  people  who  had  'phones  in  their  rooms  each  took  a  couple  of 
names,  and  we  got  busy.  About  10  o'clock  the  majority  of  these 
brokers  knew  that  they  were  to  take  these  shares  out  of  the  banks 
where  they  had  them  hypothecated  and  deliver,  them  to  the 
Bankers  Trust  and  receive  cash  for  them/' 

So  the  plans  of  the  bear  raiders  were  thwarted.  W.  F.  tells 
how  at  three  minutes  after  10  o'clock,  the  friend  in  Wall  Street 
who  had  tipped  him  off  as  to  the  plans  of  the  raiders,  called  him 
on  the  'phone  ar}d  asked:  'What  have  you  done?  What  has 
happened?  Those  fellows  had  the  scene  all  rigged  and  staged, 
but  something  has  gone  wrong.  What  is  it?' 

W.  F.  was, at  his  office  in  consultation  with  Dwight  and  his 
friend  Reass ;  and  at  10 :30  Clarke  arrived.  W,  F.  tells  me  that 
if  the  matter  had  been  left  to  him,  he  would  not  have  told  Clarke 
of  his  $6,300,000;  but  Dwight,  his  lawyer,  considered  that  it  was 
his  duty  to  start  the  conversation,  and  to  state  that  W.  F.  had 


THE  FOX  ENTERS  165 

been  so  fortunate  as  to  secure  the  money  at  the  Bankers  Trust 
Company.  Of  course  it  would  be  an  easy  matter  for  Clarke  to 
ascertain  that  the  money  thus  placed  to  the  credit  of  W.  F.  had 
been  supplied  by  the  Eastman  Kodak  Company. 

Clarke  showed  no  surprise;  he  apparently  knew  everything 
about  the  affairs  of  W.  F.  He  volunteered  no  apologies  for  not 
appearing  at  9:15  as  promised,  nor  did  Dwight  consider  it 
necessary  to  ask  him.  Said  Clarke:  "I  am  prepared  to  buy 
the  voting  shares  of  Fox  Film  and  Fox  Theatres,  and  I  am  pre- 
pared to  pay  for  them  one-third  of  $100,000,000.  I  have  here 
a  memorandum  containing  my  proposal."  He  handed  over  the 
memorandum,  which  contained  a  long,  confusing  statement, 
describing  the  terms  as  to  how  the  money  was  to  be  paid. 

"One  glance  at  the  memorandum  showed  that  his  proposal 
to  me  was  impossible.  His  plan  required  me  to  authorize  the 
Board  of  Directors  of  Fox  Theatres  to  sell  to  Clarke  the  660,900 
shares  of  Loew  stock  at  a  price  of  $33,045,000,  which  was 
$40,000,000  less  than  the  company  paid  for  them.  The  amount 
he  was  to  pay  my  company,  $33,045,000,  plus  the  $33,000,000 
he  was  to  pay  me — the  combined  figure  would  be  $7,000,000  less 
than  the  price  we  paid  for  those  shares !  I  didn't  even  stop  to 
consider  the  thing.  In  fact,  Dwight  called  his  attention  to  the 
fact  that  his  proposal  was  preposterous.  In  the  light  of  what 
had  happened  since,  in  that  Fox  Theatres  sold  these  660,900 
shares  of  stock  and  received  for  them  in  cash  $75,000,000,  or 
$42,000,000  more  than  Clarke's  proposal — I  could  well  under- 
stand his  offer  of  $33,000,000  to  me. 

"Of  course,  it  looked  like  a  simple  proposition  to  carry  out 
this  plan  with  Clarke,  because  at  this  particular  time  the  market 
on  the  Loew  shares  was  approximately  $40  a  share,  and  Clarke 
was  proposing  to  buy  them  at  $50  a  share.  Fox  could  have 
claimed  justification  for  selling  these  shares  at  more  than  the 
market  value.  Fox  Theatres  would  have  been  able  to  pay 
$33,045,000  to  its  creditors.  The  offer  to  Fox  was  a  darn  tempt- 
ing one.  You  mtast  remember  that  I  eventually  sold  out  for 
$18,000,000,  and  that  was  $15,000,000  less  than  I  could  have 
received  at  this  time.  Also  I  should  have  been  spared  all  the 
agonies  of  hell  that  I  had  to  go  through  between  this  time  in 
November  and  April  5,  1930.  And  yet  I  have  to  say  that  if  I 


166     OPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

had  to  do  it  all  over  again,  rather  than  lend  myself  to-  a  trans- 
action which  would  have  robbed  my  companies,  I  am  sure  I 
would  do  the  same  thing  over  again.  I  am  that  stubborn,  I 
would  have  held  onto  my  shares  until  hell  froze  over;  I  knew 
I  would  have  held  them,  even  though  they  would  be  wiped  out 
in  the  end, 

"Clarke  could  have  bought  my  voting  shares  first,  and  have 
then  carried  out  what  he  proposed  in  that  agreement;  but  then 
he  would  have  been  making  the  deal  with  himself,  and  perhaps 
that  wouldn't  have  been  looked  upon  as  a  perfectly  proper  trans- 
action. But  if  he  could  have  got  Fox  to  make  the  sale,  while 
Fox  was  still  in  control-  of  these  companies,  then  the  burden 
would  have  fallen  on  Fox's  shoulders,  and  not  on  Clarke's. 

"In  his  telephone  conversation  from  Chicago,  Clarke  was 
coming  down  to  give  me  one-third  of  $100,000,000.  My  guess 
is  that  be  had  more  than  this  one  memorandum  in  his  pocket. 
Had  the  stock  market  raid  taken  place,  the  other  memorandum. 
wotdd  probably  have  contained  an  offer  of  $1,000,000  for  my 
voting  shares/' 

W.  F,  now  looks  back  upon  that  episode  and  finds  it  one  of 
the  mysteries  which  will  f  never  be  solved.  Did  Clarke  really 
expect  him  to  put  through  that  deal?  To  take  a  bribe  of  one- 
third  of  $100,000,000,  for  selling  out  his  stockholders  and  robbing 
them  of  $42,000,000?  Or  was  it  just  another  device  to  stall  him 
along?  Or,  still  worse,  was  it  a  plot  to  ruin  him?  Were  they 
going  to  get  him  to  sign  this  agreement,  and  then  take  it  to  the 
newspaper  men,  or  possibly  even  to  the  District  Attorney's  office, 
or  to  the  grand  jury,  and  get  this  tough,  tenacious  Fox  safely 
caged  in  Sing  Sing  prison? 


REEL  FIFTEEN 

THE  TRAP  SHUTS 

THESE  negotiations  with  Harley  Clarke  had  not  helped  our 
Fox  with  his  problems.  One  crisis  came  upon  the  heels  of 
another.  There  were  still  some  Loew  shares  in  the  hands  of 
brokers ;  there  were  the  notes  falling  due  at  the  New  York 
banks;  and  the  English  creditors  were  threatening  foreclosure. 
W,  R  must  have  another  $4,000,000,  and  there  was  no  way 
to  get  it  except  by  the  trusteeship  agreement,  into  which  the  great 
lawyer  Hughes  and  his  partner  Dwight  were  gently  shepherding 
him. 

Stuart  and  Otterson,  the  principal  creditors  of  the  Fox  com- 
panies, in  order 'to  save  the  companies  and  get  their  money  back/ 
were  proposing  to  enter  into  an  arrangement  with  W.  R,  whereby 
the  three  of  them  would  form  a  trusteeship,  to  which  he  would 
turn  over  his  voting  shares.  The  trustees  would  "endeavor"  to 
prepare  a  plan  for  the  refinancing  of  the  companies;  they  would 
pledge  their  good  faith  to  this  end,  and  the  great  lawyer  Hughes 
assured  the  harried  and  exhausted  Fox  ^that  he  could  so  word 
this  agreement  as  to  protect  the  interests  of  both  Fox  and  his 
stockholders,  and  that  this  was  the  only  way  by  which  this  situa- 
tion could  be  saved. 

Stuart  and  Otterson,  as  the  principal  creditors  of  the  com- 
panies, were  the  ones  who  had  an  interest  in  saving  them,  and 
they  had  the  money  to  save  them;  but  of  course  they  could  not 
be  expected  to  put  up  money  unless  they  had  the  financial  control 
of  the  companies  until  their  money  had  been  returned  to  them. 
That  was  a  fair  proposition,  and  a  quite  customary  arrangement, 
said  the  lawyer;  and  W.  F.  answered,  humbly:  "Of  course,  Mr. 
Hughes*  anything  you  say  is  all  right.  I  trust  myself  entirely 
in  your  hands.  There  is  no  use  in  my  coming  here  if  I  am  not 
going  to  act  as  you  advise." 

167 


168     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

So  the  great  legal  minds  set  to  work  upon  the  voting  trust 
agreement.  It  was  ready;  and  then  came  a  singular  thing— one 
of  the  strangest  developments  I  remember  ever  to  have  heard  of 
in  business  or  legal  affairs.  Hughes  sent  for  W.  F.  and  said: 
"Now  that  the  agreement  is  ready  for  signature,  you  have  to 
make  a  choice.  Shall  I  continue  to  be  your  lawyer,  or  do  you 
wish  my  firm  to  become  the  attorneys  for  the  voting  trusteeship?" 
It  happened  unfortunately  that  when  this  question. was  put  to 
W.  F.,  his  friend  and  lawyer  Reass  had  stepped  out  of  the  room 
for  a  few  minutes.  W.  F.  was  surprised  by  the  question,  and 
didn't  know  what  to  say.  He  narrates : 

"I  told  him  I  couldn't  decide,  he  would  have  to  decide  for 
me;  as  I  had  told  him  the  day  before,  I  couldn't  think,  and  I 
didn't  know  what  to  say.  I  said  that  whichever  he  thought  was 
the  best  for  me  I  wanted  him  to  do.  He  said  no,  I  must  decide 
now  whether  I  wanted  him  to  remain  my  attorney,  or  whether 
I  wanted  his  firm  to  be  attorneys  for  the  trusteeship.  I  then 
began  to  reason  this  thing  out.  If  this  trusteeship  was  to  be 
that  which  was  represented  by  Hughes,  which  was  being  created 
for  my  benefit— if  these  two  men  were  going  to  be  the  kind 
gentlemen  they  said  they  were  going  to  be,  then  I  wouldn't  need 
a  lawyer  beyond  that.  I  wouldn't  have  any  use  for  a  lawyer. 
What  I  needed  more  than  anything  else  was  to  have  Mr.  Hughes 
be  attorney  for  the  voting  trustees,  to  see  that  no  trouble  came 
to  me.  He  was  our  lawyer— the  three  voting  trustees.  He,  the 
man  who  said  he  would  work  this  thing  out  for  me,  the  man 
who  had  actually  drawn  the  paper  which  was  being  submitted  to 
me  now  for  my  signature,  still  he  was  my  lawyer — and  what 
better  could  I  ask  than  to  have  him  the  attorney  for  the  voting 
trustees,  to  carry  out  the  terms  of  this  agreement  as  he  had 
conceived  it?  Who  was  better  qualified  to  be  the  attorney  for 
the  voting  trustees  ? 

"At  any  rate,  that  is  how  my  mind  operated  then.  I  released 
him  as  my  attorney  and  accepted  him  as  attorney  for  the  voting- 
trustees.  The  basis  on  which  these  voting  shares  were  to  be 
dissolved  was  to  be  submitted  to  Hughes  or  his  firm  for  his 
approval ;  therefore,  I  was  gaining  two  things — one,  he  was  going 
to  protect  me  on  whatever  basis  they  were  going  to  dissolve  my 
shares,  and  second,  he  understood  what  the  voting  trusteeship 


THE  TRAP  SHUTS  169 

intended  to  be,  because  he  drew  it  himself.  I  decided  that  the 
obligation  was  greater  on  his  shoulders  when  his  firm  was  to 
become  the  attorney  for  the  voting  trustees." 

W.  F.  was  right  when  he  said  that  his  mind  was  not  working 
on  that  occasion.  It  took  him  only  a  few  days  to  realize  what 
he  had  done:  he  had  hired  the  greatest  lawyer  in  the  United 
States,  and  promised  him  an  enormous  fee,  and  taken  him  into 
his  confidence,  and  told  him  all  his  troubles — and  then  turned  him 
over  to  his  enemies,  to  become  the  attorney  for  these  enemies,  to 
use  all  his  power  and  all  his  knowledge  in  fighting  and  trying 
to  destroy  the  man  who  had  employed  him !  As  I  say,  the  oddest 
development  I  remember  ever  to  have  heard  of. 

The  great  Hughes  had  given  much  time  to  these  personal 
conferences  with  W.  F. ;  but  from  this  time  on  W.  F.  never  saw 
him  again.  The  handling  of  the  case  was  turned  over  to  Richard 
Everett  Dwight.  Mr.  Dwight  is  a  graduate  of  Princeton  and  a 
very  fashionable  lawyer;  W.  F.  thought  that  his  face  looked 
familiar,  and  after  a  week  or  so  he  remembered  where  he  had 
met  him,  more  than  twenty  years  back.  Dwight  was  seventy- 
five  pounds  heavier,  but  still  the  same  person  who  had  repre- 
sented the  General  Film  Company,  that  motion  picture  trust 
which  in  1908  had  cleaned  everybody  else  out  of  the  field.  Dwight 
had  sat  up  all  one  night  with  W.  F.,  negotiating  a  settlement; 
.and  had  handed  over  a  check  for  $350,000.  A  great  humiliation 
for  a  rising  young  lawyer!  Could  it  be  that  Dwight  cherished 
the  memory,  and  was  not  sorry  for  the  development  which  in 
a  few  days  placed  him  at  the  head  of  the  enemies  of  William 
Fox? 

The  negotiations  concerning  the  trust  agreement  took  place 
in  the  presence  of  Hughes,  Dwight,  Reass,  Hartfield,  Otterson, 
Stuart  and  their  lawyers.  W.  F.  agreed  to  turn  over  to  a 
trusteeship  of  three  persons,  Otterson,  Stuart  and  himself,  ^his 
voting  shares  of  the  Fox  Film  Corporation,  50,101  shares  out  of 
the  100,000  Class  B  shares ;  also  100,000  Class  B  shares  of  the 
Fox  Theatres  Corporation,  which  is  100  per  cent  of  the  voting 
stock.  These  shares  were  to  be  turned  over  to  the  Bankers  Trust 
Company  with  an  escrow  letter.  W.  F.  agreed  to  deliver  to  the 
trustees  the  resignations  of  all  the  directors  of  the  companies, 
and  of  such  officers  of  the  companies  as  the  trustees  might  request, 


170     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

with  the  exception  of  the  president;  also  the  resignations  of 
directors  in  fully  controlled  subsidiaries,  and  of  those  directors 
who  represented  the  interests  of  Fox  in  the  partially  controlled 
subsidiaries. 

The  crucial  paragraph  of  the  agreement  was  the  third : 

'The  trustees  will  endeavor  to  prepare  a  plan  of  reorganiza- 
tion and  refinancing  of  the  companies  and  in  the  meantime  will 
undertake  negotiations  with  a  view  to  preventing  the  sacrifice  of 
the  assets  of  the  companies,  including  particularly  securities 
pledged.  The  trustees  will  also  undertake  to  negotiate  with 
creditors  and  other  persons  interested  in  the  situation  with  the 
view  of  obtaining  their  forbearance  and  co-operation  during  the 
period  of  the  preparation  and  submission  and  adoption  of  any 
such  plan/* 

It  was  furthermore  provided  that  Hughes,  Schurman  & 
Dwigfat  should  be  the  counsel  for  the  trustees,  and  thai:  "no  plan 
of  reorganization  or  financing  of  the  companies  shall  be  finally 
submitted  to  the  creditors  and  stockholders  for  approval  and 
adoption  until  all  the  legal  questions  involved  therein  shall  have 
been  approved  by  such  counsel."  It  was  furthermore  provided 
that  "the  action  of  any  two  of  the  trustees  with  respect  to  any 
of  the  matters  embraced  in  this  agreement  shall  be  deemed  to 
be  the  action  of  the  trustees/' 

I  hesitate  to  put  myself  in  the  position  of  criticizing  the  legal 
work  of  the  great  Charles  Evans  Hughes,  but  I  cannot  refrain 
from  calling  attention  to  a  peculiar  provision  in  this  agreement 
m  the  second  paragraph:  "Fox  agrees  to  deliver  to  the  trustees 
forthwith  the  resignations  of  all  the  directors  of  the  two  com- 
panies." The  eleventh  paragraph  declared :  "It  is  ttnderstood  and 
agreed  that  the  resignations  of  a  majority  of  the  directors  of  the 
Fox  Film  Corporation  and  Fox  Theatres  Corporation  are  to  be 
accepted  forthwith  and  Fox  covenants  and  agrees  that  he  will 
forthwith  cause  the  remaining  directors  to  elect  in  the  place  and 
stead  of  the-  directors  whose  resignations  are  accepted  persons 
nominated  by  the  trustees/' 

It  seems  that  this  eleventh  paragraph  makes  it  clear  that  Fox 
is  to  have  a  minority  of  directors  representing  him ;  but  if  so, 
why  should  the  second  paragraph  provide  that  Fox  should  deliver 
the  resignations  of  all  the  directors? 


THE  TRAP  SHUTS  171 

The  voting  trust  agreement  lay  on  the  desk.  W.  F.  had  read 
it,  as  well  as  he  could  in  his  exhausted  state ;  but  he  wasn't  so 
much  concerned  about  its  phraseology  as  he  was  about  having  a 
gentlemen's  understanding  among  the  trustees,  made  in  the 
presence  of  their  lawyers  and  his.  These  understanding  gentle- 
men promised  him  that  he  was  to  remain  as  president  of  both 
the  corporations,  and  as  a  director  of  each.  Also  that  his  brother- 
in-law,  Jack  Leo,  should  remain  as  a  director,  and  two  others  of 
his  employees,  Sheehan  and  King,  whom  he  counted  as  his  loyal 
friends.  W.  F.  had  withdrawn  from  the  room  with  Hartfield  and 
Reass  to  study  the  voting  trust  agreement,  and  Hartfield  made 
a  written  memorandum  of  the  gentlemen's  agreement  which  W. 
F.  wanted  to  have  stated.  These  propositions  were  stated  by 
W.  F.  to  Stuart  and  Otterson  and  all  the  lawyers,  and  they  all 
agreed  that  they  were  gentlemen,  and  that  this  was  their  agree- 
ment. 

Of  course,  everything  connected  with  this  voting  trust  arrange- 
ment depended  upon  the  goed  faith  of  the  two  men  who  were 
to  constitute  the  acting  majority  of  the  trustees  and  in  whose 
hands  lay  the  whale  conduct  of  affairs.  W.  F.  was  parting  with 
his  two  most  precious  pieces  of  paper,  and  the  two  companies, 
Fox  Film  and  Fox  Theatres,  were  placed  at  the  mercy  of  Otter- 
son  and  Stuart.  They  assured  him  that  they  had  no  desire  to 
run  his  companies  or  to  interfere  with  his  running  of  his  com- 
panies. He  was  earning  dividends  and  they  were  satisfied  with 
what  he  was  earning.  All  they  wished  to  have  was  the  handling 
of  the  financing  of  the  companies,  so  as  to  get  back  their 
$30,000,000.  If  they  were  to  sell  new  securities  to  the  public, 
they  must  have  the  administering  of  the  finances  until  this  had 
been  accomplished-  That  was  their  only  purpose  in  entering  into 
the  agreement,  they  declared;  and  if  that  was  so,  then  they  were 
gentlemen,  and  their  undertaking  was  a  legitimate  and  honorable 
one.  If,  on  the  other  hand,  they  wanted  to  disrupt  W.  F.'s  man- 
agement of  the  companies,  to  take  them  away  from  him  and 
make  them  their  own,  then  they  were  conspirators  and  bandits. 
Which  were  they? 

On  the  day  after  the  signing  of  the  agreement,  the  three 
trustees  had  their  first  conference.  W.  F.  suggested  that  they 
should  meet  at  the  offices  of  the  Fox  Film  Corporation,  but  he 


172     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

was  promptly  told  that  the  trustees  had  no  intention  of  ever 
meeting  at  the  offices  of  the  Fox  Film  Corporation.  The  head- 
quarters for  the  conduct  of  Fox  Film  and  Fox  Theatres  in  the 
future  would  be  at  the  corner  of  Dye  Street  and  Broadway,  the 
offices  of  the  American  Telephone  &  Telegraph  Company. 

W.  F.  describes  his  physical  condition  on  that  day : 

"During  the  month  of  November,  1929,  it  was  common  to 
read  in  the  newspapers  of  men  who  had  met  with  reverses  dur- 
ing these  thirty  days,  resorting  to  every  known  means  to  bring 
life  to  an  end.  During  this  period  there  were  suicides  daily,  and 
in  each  instance  there  was  a  Wall  Street  record  behind  it.  In 
jest  I  have  often  heard  that  Wall  Street  winds  crookedly,  with  a 
river  at  one  end  and  a  cemetery  at  the  other,  and  now  this  became 
a  reality  to  me.  During  these  thirty  days  I  had  exactly  sixty  hours 
of  sleep.  I  was  mentally  tired  and  physically  worn  out  I  am  not 
exaggerating  this  in  the  slightest  degree  when  I  tell  you  that 
when  I  attended  the  first  meeting  of  the  trustees,  if  I  sat  down 
in  a  chair  I  fell  asleep  and  if  I  stood  up  I  felt  like  falling  down. 
I  was  bewildered/' 

Here  is  the  scene  of  the  first  meeting: 

"When  we  gathered  at  the  offices  of  the  Telephone  Company 
and  when  I  arrived,  there  were  present  Dwight,  Charles  Stuart, 
and  a  lawyer  who  was  to  act  as  secretary.  One  chair  was  at 
the  head  of  the  table,  the  others  were  arranged  on  each  side. 
Dwight  greeted  me  very  cordially  as  I  came  in,  and  escorted  me 
to  one  of  the  chairs,  where  he  had  decided  I  should  sit.  That 
gesture  was  wholly  without  significance  to  me.  Otterson  came 
in  next.  The  chair  at  the  head  of  the  table  was  still  unoccupied, 
and  Otterson  took  it.  The  first  thing  that  had  to  be  done  was 
to  elect  a  chairman,  a  chairman  of  the  trustees.  Dwight  pointed 
to  Otterson  and  said,  *You  are  occupying  the  chairman's  seat 
now,  I  presume  you  are  to  be  the  chairman' ;  and  then  turned  to 
Charles  Stuart  to  see  whether  that  was  agreeable  to  him.  Charles 
Stuart  said,  These  stocks  don't  belong  to  us;  it  strikes  me  it 
would  be  more  appropriate  to  have  Fox  the  chairman  of  tlie 
trustees  for  his  own  stock.'  Dwight's  plan  was  foiled,  of  course, 
because  it  took  two  of  the  three  trustees  to  elect  a  chairman. 
When  he  heard  Charles'  view,  he  promptly  said,  *I  suppose  then 
tinder  those  circumstances  Fox  ought  to  be  the  chairman.'  " 


THE  TRAP  SHUTS  173 

Hartfield  came,  and  the  trustees  got  down  to  business.  The 
first  announcement  was  that  before  the  meeting  could  go  forward, 
William  Fox  must  give  them  a  statement  of  the  assets  and 
liabilities  of  William  Fox.  He  found  this  demand  surprising,  for 
he  had  been  under  the  impression  that  it  was  the  Fox  companies 
which  were  in  financial  difficulties,  and  not  Fox  himself.  The 
trustees  were  supposed  to  administer  the  voting  shares  of  Fox 
for  his  benefit;  but  here  they  were  proposing  to  strip  him  of 
everything  he  owned.  He  asks: 

"Were  they  inquiring  to  know  all  my  personal  assets  so  that 
they  could  give  me  further  aid  if  necessary?  I  soon  found  that 
was  not  so.  Their  questions  were  directed  at  me  because  they 
claimed  that  $4,000,000  was  necessary,  and  if  I  had  $4,000,000 
anywhere,  anyhow,  or  had  properties  that  were  worth  $4,000,000, 
they  should  know  it.  If  I  had  it  in  cash  I  ought  to  loan  the 
company  $4,000,000.  If  I  had  it  in  personal  properties,  I  should 
give  it  to  them  as  collateral  for  the  $4,000,000  required.  The 
fact  that  the  companies  had  unencumbered  assets  of  more  than 
$30,000,000,  which  the  companies  were  perfectly  free  to  pledge 
for  anything  necessary,  did  not  concern  my  trustees  at  all.  The 
main  purpose  here  was  to  take  from  Fox  everything  he  had. 
As  tired  and  as  weary  as  I  was,  I  knew  that  that  was  not  for 
my  benefit,  and  I  protested. 

"From  time  to  time  I  have  read  newspaper  accounts  of  a 
third  degree  at  Police  Headquarters  in  New  York.  I  had  seen 
scenes  portrayed  in  pictures  of  a  prisoner  receiving  his  third 
degree  in  an  effort  to  make  him  break  down  and  obtain  a  con- 
fession. Here  I  was  getting  a  third  degree  as  hard  as  it  was 
possible.  By  whom?  Otterson  representing  the  Telephone 
Company,  Charles  Stuart  of  Halsey,  Stuart,  and  Dwight  of  the 
firm  of  Hughes,  Schurman  &  Dwight,  who  only  twenty-four 
hours  before  was  my  personal  attorney.  I  resisted  this  third 
degree,  and  soon  I  found  my  other  honorable  lawyer,  Hartfield, 
asking  me  to  step  into  another  room — he  wanted  to  have  a  talk 
with  me.  We  did,  and  he  spent  a  half  hour  or  more  trying  to 
convince  me.  that  what  these  gentlemen  were  asking  me  was  per- 
fectly proper  and  right,  and  I  should  give  them  this  memorandum 
indicating  what  my  assets  and  liabilities  were. 

"When  this  trouble  first  began,  I  realized  one  of  the  things 


174     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

I  had  to  have  was  as  much  available  cash  as  possible.  I  had  a 
large  equity  or  loaning  power  on  my  life  insurance  policies,  and 
I  had  promptly  applied  to  the  life  insurance  company  for  loans 
against  my  policies.  It  was  on  this  particular  morning  that  my 
secretary  handed  me  a  batch  of  checks  that  we  had  received  as 
loans  on  my  life  insurance  policies,  amounting  to  approximately 
$490,000.  How  Otterson,  Stuart,  Dwight  and  Hartfield  found 
that  out,  I  have  been  unable  to  discover  up  to  this  day.  This 
was  the  $490,000  that  really  belonged  to  my  widow  and  orphans 
if  I  were  to  die,  for  I  had  insured  my  life  for  their  benefit.  That 
conference  did  not  end  that  morning  until  I  took  from  my  pockets 
this  $490,000  worth  of  checks  and  turned  them  over  to  my  com- 
panies. It  was  only  after  I  agreed  to  do  that  that  my  trustees 
would  arrange  to  take  from  our  brokers  the  stocks  that  were 
there  and  which  the  brokers  were  carrying  on  margin,  to  lift 
the  balance  of  these  shares  out  of  the  hands  of  my  brokers  and 
place  them  with  two  banks." 

There  was  an  important  point  to  be  noted  here.  Very  soon 
when  the  break  comes,  we  shall  find  Harry  Stuart  and  Otterson 
declaring  that  they  obtained  money  to  save  W.  F.»  and  that  this 
is  one  of  the  reasons  why  they  have  acquired  an  interest  in  the 
trusteeship  agreement.  We  shall  find  Harry  Stuart  and  Otterson 
declaring  under  oath  that  they  endorsed  notes  for  this  money — 
and  failing  to  say  a  single  word  about  the  fact  that  they  required 
W.  F.  to  put  up  collateral  to  cover  every  dollar  of  these  loans. 
In  the  charges  and  counter-charges  in  which  presently  we  shall 
find  oursdves  entangled,  it  will  be  important  to  bear  this  detail 
in  mind  Again  and  again  in  this  book  we  have  read  accounts 
of  interviews  in  which  W.  F.  was  alone  with  Sttiart  or  with 
Otterson,  and  in  which  he  declares  that  promises  were  made; 
we  shall  find  them  declaring  in  their  affidavits  that  no  such  inter- 
views took  place  and  no  such  promises  were  made;  and  which 
are  we  going  to  believe?  Here  is  one  place  where  we  can  judge. 
Says  W.  F.: 

"Neither  the  Telephone  Company  nor  Halsey,  Stuart  ever 
loaned  these  companies  a  single  dollar  in  this  emergency  where 
they  were  trustees.  In  their  affidavits  they  said  the  Telephone 
Company  endorsed  a  note.  They  didn't  tell  you  in  that  affidavit 
that  that  note  was  accompanied  J>y  collateral  traded  in  in  the 


THE  TRAP  SHUTS  175 

New  York  Stock  Exchange,  and  that  for  nearly  $4,000,000  these 
two  men  had  obtained,  we  had  deposited  approximately  $6,500,- 
000  worth  of  New  York  Stock  Exchange  collateral :  $1,000,000  of 
Warner  Brothers  notes,  and  the  rest  shares  of  Loew's,  Fox  Film 
and  Fox  Theatres.  They  were  not  required  to  lend  their  names 
to  these  loans.  They  told  the  banks  to  take  the  collateral  and 
make  the  loans — just  as  up  to  this  time  they  had  told  the  banks 
not  to  make  loans,  regardless  of  collateral.  Neither  of  these 
trustees  had  guaranteed  anything  or  put  their  hands  in  their 
pockets  for  a  penny.  The  communication  of  Stuart,  in  which 
he  said  that  the  voting  trust  had  come  to  an  end  and  that  he 
would  no  longer  put  up  any  money,  meant  nothing,  because  tip 
to  that  time  he  hadn't  put  up  a  dollar.  True,  he  told  us  what 
banks  to  go  to  to  get  this  money ;  but  that  is  what  banks  are  for." 
There  was  the  problem  of  the  English  obligation: 
"It  became  necessary  to  call  London  on  the  telephone,  which 
we  did  from  the  Telephone  Company's  offices,  and  carry  on 
quite  a  lengthy  conversation  with  the  Telephone  representative  in 
London,  who  was  handling  the  English  creditors,  knowing  them 
all.  His  suggestion  was  that  approximately  $1,000,000  was  nec- 
essary at  this  time  to  temporarily  tide  over  the  reqoiremerrts  ia 
England.  There  were  one  or  two  more  trustees'  meetings,  aH 
concerning  the  English  situation,  and  the  arrangement  was  to 
take  collateral  belonging  to  Fox  Film  and  Fox  Theatres  and 
hypothecate  it  for  the  loans  from  banks  designated  by  Stuart  and 
the  Telephone  Company.  I  believe  the  last  of  these  meetings 
was  conducted  about  Friday  or  Saturday  of  that  week. 

"Much  of  the  time  was  spent  in  discussing  how  promptly 
these  meetings  were  to  be  held.  It  appeared  that  Otterson  and 
Stuart  wanted  to  reserve  for  themselves  the  right  to  call  a  meet- 
ing to  be  held  in  the  Telephone  Company's  offices  at  an  hour's 
notice.  After  a  very  lengthy  discussion  on  this  subject  I  con- 
vinced them  that  that  was  wholly  unfair,  that  I  might  be  uptown 
and  couldn't  arrive  downtown  in  an  hour,  and  after  long  debate, 
it  was  finally  consented  that — I  believe  it  was  either  two  or  two 
and  a  half  hours'  notice  to  be  given.  It  was  clear  to  me  that  I 
was  going  to  spend  the  remainder  of  my  time  in  running  the 
affairs  of  Fox  Film  and  Fox  Theatres  by  attending  trustees' 
meetings." 
is 


176     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Next  came  the  problem  of  the  New  York  bankers.  All  these 
gentlemen  had  wanted  their  money  from  W.  F.,  and  had  refused 
to  hear  to  any  extensions,  or  to  accept  any  of  the  collateral  which 
W.  F.  kept  pressing  upon  them.  But,  of  course,  it  was  an 
entirely  different  matter  when  the  outlaw  Fox  was  taken  over  by 
great  and  respectable  concerns  such  as  the  Telephone  Company 
and  Halsey,  Stuart  &  Co.  The  bankers  were  invited  to  the  offices 
of  the  Telephone  Company,  and  they  assembled  and  listened  to 
an  address  by  Otterson,  in  which  he  informed  them  of  the  new 
voting  trust  arrangement.  The  Telephone  Company  would  con- 
sider it  a  favor  af  they  would  be  indulgent,  until  a  plan  of 
financing  could  be  worked  out  whereby  everyone  could  get  his 
money.  Everyone  was  pleased,  and  everyone  was  indulgent. 
There  would  be  no  further  trouble  from  the  New  York  bankers. 

There  were  several  of  the  executives  of  Fox  Film  and  Fox 
Theatres  who  were  supposed  to  be  the  friends  and  supporters  of 
W.  F.,  but  who,  as  he  was  now  discovering,  had  been  won  away 
from  him  by  his  enemies.  He  learned  that  two  of  these  men, 
Sheehan  and  King,  were  having  secret  conferences  with  Stuart 
and  Otterson.  He  thought  that  if  there  were  to  be  conferences 
of  executives  with  trustees,  he,  as  the  third  trustee,  should  be 
present.  He  consulted  Hartfield  about  this,  and  Hartfield  re- 
minded him  of  the  gentleman's  agreement  which  had  been  made 
when  the  voting  trust  was  signed.  W.  F.  recited  his  understand- 
ing of  this  agreement — that  his  four  directors,  Fox,  Leo,  Sheehan 
and  King,  were  to  remain  on  the  board ;  that  Fox  was  to  remain 
the  president  of  both  companies,  and  that  Otterson  was  to  with- 
draw when  his  money  was  repaid.  Hartfield  said  that  he  had  had 
the  same  understanding,  and  had  made  a  memorandum  of  it;  he 
showed  the  memorandum  to  W.  F. 

But  now  it  appeared  that  Stuart  and  Otterson  were  denying 
any  such  understanding,  and  were  preparing  to  remove  Leo  from 
the  board  of  directors.  W.  F.  asked  Hartfield  the  reason  for 
this,  and  Hartfield  answered,  because  Leo  was  too  close  to  Fox. 
That  indicated  clearly  that  King  and  Sheehan  were  not  close  to 
Fox,  and  showed  definitely  what  had  been  going  on  at  the  private 
talks  of  King  and  Sheehan  with  Otterson  and  Stuart.  Says  W.  F. : 

"I  said  that  would  be  all  wrong;  Mr.  Leo  must  be  retained, 
because  his  executive  position  was  about  on  a  par  with  a  car- 


THE  TRAP  SHUTS  177 

buretor  of  an  automobile.  What  could  these  men  be  thinking  of 
doing,  that  they  didn't  want  Leo  to  know  and  didn't  want  me  to 
know?  I  said  to  Hartfield,  *I  didn't  understand  that  these  two 
men  were  to  run  the  companies.  It  was  only  to  enable  them  to 
do  the  necessary  financing,  and  while  the  trust  agreement  didn't 
obligate  them  to  do  the  financing,  at  least  they  were  going  to  try 
to  do  it.  That  was  all  the  voting  trust  was  for/  Hartfield  said, 
*I  don't  know  what  they  have  on  their  minds  any  more  than  that 
they  don't  want  Leo  for  a  director — he  is  too  close  to  you.  If  he 
is  a  director,  you  will  know  everything  that  happens,  and  they 
don't  propose  to  have  that/  " 

After  that  conference  W.  F.  went  to  his  home  on  Long  Island. 
He  was  ill,  and  his  doctor  was  sent  for,  and  reported  his  tem- 
perature at  103^>.  He  stayed  in  bed  for  five  or  six  days,  and  in 
that  period  of  time  the  other  two  trustees  were  able  to  hold 
meetings  without  being  burdened  by  his  presence.  One  of  the 
things  they  did  in  the  interim  was  to  summon  from  Los  Angeles 
Harold  B.  Franklin,  president  of  West  Coast  Theatres.  This 
corporation,  you  must  be  reminded,  is  a  wholly  owned  subsidiary 
of  Fox  Film.  At  the  time  W.  F.  bought  the  concern,  Franklin 
had  a  contract  for  $150,000  per  year,  plus  "10  per  cent  of  the  net 
profits  of  the  corporation.  W.  F.  doesn't  approve  of  those  10  per 
cent  arrangements,  but  there  was  no  way  to  get  rid  of  the  con- 
tract. He  had  brought  the  earnings  of  West  Coast  up  to  $5,500,- 
000  in  the  year  1929,  and  therefore  Franklin  was  about  to  receive 
$550,000— bringing  his  total  compensation  to  $700,000.  That 
would  seem  to  be  ample,  but  apparently  it  did  not  seem  so  to 
Stuart  and  Otterson,  for  W.  F.  now  learned  that  they  had  brought 
Franklin  on  to  make  him  a  proposition  that  he  should  become 
also  the  president  of  Fox  Theatres,  and  receive  a  further  salary 
of  $150,000  a  year  in  that  capacity,  plus  10  per  cent  of  the  net 
earnings  of  Fox  Theatres,  which  during  the  year  1929  were  over 
$2,000,000. 

But  how  could  they  offer  this  new  post  to  Franklin  when  it 
was  already  held  by  W.  F?  Why  pay  a  man  $350,000  a  year 
for  doing  a  job,  which  another  man  was  doing  faithfully  for  noth- 
ing? Could  it  be  that  working  without  salary  was  considered  to 
be  setting  a  bad  example  in  Wall  Street? 

And  also,  what  about  the  gentlemen's  agreement?    Could  it 


178     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

be  that  the  agreement  had  been  made  under  a  misapprehension  ? 
That  the  wearing  of  a  carnation  in  one's  buttonhole  when  attend- 
ing directors'  meetings,  or  being  a  graduate  of  Annapolis  and  a 
lieutenant  and  naval  constructor,  does  not  necessarily  imply  that 
one  is  a  gentleman  ?  Says  W.  F. : 

"There  came  to  me  a  clear  realization  that  I  had  made  a  ter- 
rific mistake;  that  I  had  taken  that  which  I  had  earned  by  the 
sweat  of  my  brow  as  a  result  of  hard  labor  for  twenty-five  years, 
and  that  I  had  parted  with  it,  and  that  the  two  men  who  now 
had  charge  of  it  were  not  going  to  be  trustees  for  my  estate  or 
for  my  property,  but  intended  to  disrupt,  disorganize,  and  ruin 
the  venture  that  I  had  built  over  a  period  of  a  lifetime.  It  was 
now  up  to  me  to  try  to  confirm  if  I  was  right  in  my  contention." 

W.  F.  consulted  his  friend,  Benjamin  Reass,  and  on  Friday 
evening,  the  fifth  day  of  his  illness,  Reass  came  to  his  home  with 
HartfidkL 

"Tbere  were  present  at  this  conference  Mr.  Reass,  Jack  Leo, 
Colonel  Hartfidd,  Mrs.  Fox  and  rny  daughter,  Mona.  I  didn't 
know  what  the  conversation  was  in  the  lower  end  of  this  building; 
I  was  confined  in  my  bedroom.  I  was  later  informed  that  Hart- 
field  had  expressed  to  my  wife  his  regrets  for  the  great  difficulties 
her  husband  found  himself  in,  and  paralleled  this  to  a  general  in 
the  army.  He  said  when  a  general  in  the  army  plans  a  battle  and 
loses  it,  he  must  expect  to  be  deposed.  He  told  Mrs.  Fox  that 
her  husband  had  carried  on  a  battle  here  just  as  a  general  in  the 
army  did,  and  having  lost  a  battle,  he  must  expect  the  same  fate 
as  a  general  in  the  army. 

"I  heard  loud  voices  downstairs  and  rang  the  bell  and  asked 
tlfcem  to  please  come  tip.  Mrs,  Fox  didn't  tell  me  of  this  talk 
while  Hartfield  was  there.  I  now  wish  she  had  done  so.  Hart- 
field  sakl  it  was  important  that  I  promptly  meet  with  Dwignt. 

"Oae  of  the  things  that  my  lawyers  had  failed  to  include  in 
the  voting  trust  agreement  was  my  definite  understanding  that 
when  the  Telephone  Company  was  reimbursed  for  the  $15,000,- 
000  they  had  loaned  to  the  company,  Otterson  would  resign  as  a 
trustee.  Qoe  of  the  thpttghts  in  my  mind  was  that  I  wanted  the 
Telephone  Company  out  of  my  business  as  soon  as  I  could  get 
it  out  I  didn't  want  the  Telephone  Company  running  my  busi- 
ness— particularly  ki  view  of  cmr  controversy  over  tibe  Tri-Ergon 


THE  TRAP  SHUTS  179 

patents.  Hartfield  had  failed  to  include  that  in  the  voting  trust 
agreement  I  had  said  to  Hartfield  that  I  thought  I  would  be 
well  enough  to  come  to  New  York  on  Sunday  to  have  the  con- 
ference he  suggested,  and  I  did  go  to  New  York  that  Sunday 
evening  to  hold  a  conference  at  which  were  present  Reass,  New- 
man, Rubenstein,  Hartfield,  Dwight  and  myself,  I  had  gone  in 
to  recite  what  had  been  brought  to  my  attention  during  that  week. 
I  openly  charged  the  contemptible  things  these  trustees  were 
doing  while  I  was  ill  in  bed. 

"Dwight  defended  the  trustees,  saying  that  what  they  did  they 
had  a  full  right  to  do.  I  told  Dwight  that  when  this  trust  agree- 
ment was  drawn,  his  firm  had  failed  to  include  in  the  voting  trust 
agreement  that  Otterson  was  to  resign  as  a  trustee  as  soon  as  the 
Telephone  Company  had  received  its  $15,000,000.  That  was  dis- 
cussed. Dwight  took  the  position  that  there  was  never  such  an 
understanding,  and  that  his  client  expected  to  remain  the  trustee 
for  those  shares  which  belonged  to  me,  and  that  if  I  insisted 
upon  that  being  done,  if  I  insisted  that  Otterson  resign  when  the 
Telephone  Company  was  reimbursed  for  its  $15,000,OOQ>  then  the 
whole  deal  was  off;  we  could  dissolve  the  voting  trust  agree- 
ment— he -knew  his  client  would  never  agree  to  anything  like  that. 
Dwight  left  the  room,  calling  the  trust  agreement  off;  it  was 
ended  as  far  as  he  or  his  clients  were  concerned.  Hartfield  tried! 
to  persuade  him  to  come  back,  and  suggested  that  perhaps  it 
would  be  an  easy  matter  for  him  to  get  the  Telephone  Con^pany 
to  agree  to  withdraw  upon  the  receipt  of  their  $15,000,000.  But 
Dwight  insisted  nothing  doing,  and  finally  left." 

So  that  is  what  has  become  of  all  W.  F.'s  bright  hopes  in 
connection  with  the  law  firm  of  Hughes,  Schurman  &  Dwight  I 
Three  weeks  had  passed  since  he  visited  the  great  Charles  Evans 
Hughes,  and  told  him  all  his  troubles,  and  received  many  firm 
pressures  from  his  hand,  and  been  told  that  the  great  man's 
shoulders  were  broad,  and  that  from  BOW  on  he  would  carry  the 
burdens  of  the  little  Fox.  Charles  Evans  Hughes,  for  four  years 
reform  governor  of  -New  York  State,  for  six  years  a  Justke  of 
the  Supreme  Court  of  the  United  States,  for  four  years  Secre- 
tary of  State  of  the  United  States — this  world- famous  statesman 
had  agreed  to  protect  William  Fox  from  his  powerful  and  dan- 
gerous enemies,  for  a  fee  which  turned  out  in  the  end  to  be 


180     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

$520,000;  and  his  partner,  Richard  Everett  ^Dwight,  would  earn 
that  fee  by  the  bitterest  opposition  to  every  interest  that  the  Fox 
has  and  to  every  right  that  he  claims !  Do  you  agree  with  me 
that  this  is  an  odd  development  of  a  legal  bargain? 

Looking  back  on  the  events  from  a  distance  of  two  years  and 
a  half,  W.  F.  records  this  opinion : 

"It  was  not  a  trusteeship  agreement.  The  title  was  entirely 
wrong.  Stuart  and  Otterson  never  intended  to  be  trustees— they 
intended  to  be  destroyers  of  what  I  had  built  up.  They  didn't 
intend  to  protect  me,  they  intended  to  wreck  me  and  take  my 
property.  And  when  Mr.  Hughes  helped  to  draw  this  paper,  no 
one  knew  better  than  he  that  he  had  prepared  a  paper  that  would 
not  act  in  the  interest  of  William  Fox;  that  he  was  not  protect- 
ing Fox,  and  that  these  men  were  receiving  powers  not  accorded 
to  trustees.  I  don't  want  to  find  fault  with  Dwight;  I  didn't  talk 
to  him.  But  I  had  my  confidential  talk  with  Judge  Hughes,  and  he 
extended  me  his  hand  as  a  friend,  and  said  he  would  assume  the 
burdens  and  responsibilities  from  then  on;  that  my  troubks  were 
over.  Didn't  he  know  that  that  wasn't  a  trust  agreement  to  pro- 
tect my  property?  Of  course  he  did;  he  must  have  known  it," 

Also,  let  us  say  a  few  words  about  the  difficult  situation  of 
Colonel  Hartfield  from  Kentucky.  The  colonel  has  undertaken  to 
become  the  lawyer  of  W.  F.,  and  to  be  paid  $1,000,000  if  he 
can  succeed  in  saving  the  companies  from  receivership.  In  this 
effort  his  opponents  are  the  big  bankers  whom  he  has  hitherto 
been  representing,  and  the  big  lawyers  with  whom  he  has  hitherto 
been  associated ;  they  are  the  bankers  whom  he  will  be  represent- 
ing in  the  future,  and  the  lawyers  with  whom  he  will  be  asso- 
ciated, when  this  one  little  misadventure  is  over.  His  firm,  White 
&  Case,  was  counsel  for  the  Bankers  Trust,  one  of  the  creditors, 
and  the  bank  which  had  the  voting  shares  in  escrow. 

Hartfield's  embarrassing  position  was  set  forth  at  one  of  the 
conferences  with  the  bankers— the  speaker  being  a  young  lawyer 
who  had  not  yet  learned  discretion.  Said  this  youngster: 
"Colonel,  isn't  it  rather  peculiar  for  you  to  be  on  the  other  side 
of  the  fence?  I  have  never  known  you  to  be  for  the  debtor — you 
are  always  for  the  creditor.  You  were  always  a  bankers'  lawyer." 
Hartfield  turned  this  off  with  a  laugh,  as  he  so  well  knows  how 
to  do. 


THE  TRAP  SHUTS  181 

Whatever  the  reason  may  be,  through  most  of  these  negotia- 
tions Hartfield  considered  it  his  duty  to  advise  W.  F.  to  do  the 
things  which  his  enemies  wanted  him  to  do,  rather  than  the 
things  which  W.  F.  himself  wanted  to  do.  But  then,  when  the 
situation  grew  too  bad,  Hartfield  would  become  conscience- 
stricken,  and  remember  who  it  was  that  was  paying  him.  One 
of  these  occasions  had  been  on  the  previous  Sunday,  when  he 
had  met  W.  F.  at  the  Ambassador  Hotel,  and  agreed  with  him 
about  the  gentlemen's  agreement,  and  told  him  that  the  trustees 
were  planning  to  remove  Jack  Leo  from  the  board  of  directors 
of  the  two  companies.  A  second  occasion  was  here,  a  week  later, 
after  Dwight  had  made  his  announcement  that  the  trust  agree- 
ment was  off  for  good  and  all.  Says  W.  F. : 

"In  the  presence  of  Benjamin  Reass,  Jacob  L.  Rubenstein  and 
Emanuel  Newman,  Hartfield  said  that  he  had  withheld  this  infor- 
mation, but  now  that  the  whole  thing  was  terminated,  he  ought 
to  tell  me  what  had  transpired  during  the  week  I  was  lying  in 
bed.  One,  they  had  no  intention  of  electing  Jack  Leo  as  a  direc- 
tor. Two,  they  had  no  intention  of  retaining  me  as  president. 
Three,  Harry  Stuart  had  suggested  that  I  ought  immediately  to 
leave  the  country,  and  stay  for  at  least  six  months,  because  the 
disgrace  and  humiliation  showered  on  me  would  be  so  great  I 
could  never  stand  it." 

So  there  at  last  the  cat  was  out  of  the  bag!  The  Fox  knew 
the  whole  program  now;  and  next  morning  the  whole  of  New 
York  knew  it.  For  when  he  picked  up  the  New  York  "Times," 
for  Monday,  December  16,  he  read  a  front  page  story  "according 
to  an  authoritative  source,"  setting  forth  that  "a  new  holding 
company  has  been  definitely  decided  upon  by  the  trustees,"  and 
that  there  was  to  be  "wider  participation  of  Class  A  stock  in 
management" — which  meant,  of  course,  the  dissolution  of  W,  F/s 
voting  shares.  He  says : 

"Under  the  trust  agreement,  if  it  became  necessary  to  dissolve 
these  B  shares,  they  were  to  give  me  1%  shares  of  A  stock  for 
each  share  of  B  stock.  Had  they  done  that,  they  would  have 
given  me  75,000  shares  of  Fox  Film  at  the  then  market  price  of 
$20  a  share,  and  150,000  shares  of  Fox  Theatres  at  $8  a  share; 
so  I  would  have  shares  with  a  market  value  of  $2,700,000.  That 
was  the  price  they  were  to  pay  for  taking  over  the  companies  and 


182     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

throwing  me  out — a  price  that  was  $30,500,000  less  than  Clarke 
had  offered  me  a  brief  two  weeks  before !  This  would  of  course 
have  put  the  companies  entirely  in  the  hands  of  the  Telephone 
Company;  they  were  going  to  be  in  the  motion  picture  business. 
And  it  wasn't  going  to  cost  them  anything;  they  were  getting  the 
business  practically  gratis. 

"We  inquired  from  Hartfield  as  to  how  that  article  appeared 
in  the  newspaper — who  issued  that  story?  He  disclaimed  any 
knowledge  of  it  at  all;  in  fact,  no  one  from  Dwight  on  down 
knew  anything  about  it.  They  said  the  story  must  have  been 
given  to  the  New  York  'Times'  by  me,  and  I  must  have  had  a 
definite  reason  for  giving  it  to  them ;  what  was  my  purpose  ? 

"During  all  these  trials  and  tribulations  one  of  the  editors  of 
the  New  York  Times'  constantly  kept  in  touch  with  me,  and 
insisted  that  I  tell  him  all  I  could  as  the  case  progressed.  I  asked 
him  to  call  on  me  at  my  home  the  next  night.  I  realized  that  in 
Ms  sober  senses  he  would  give  me  no  information,  so  together 
we  split  a  quart  bottle  of  Scotch,  and  we  both  became  talkative. 
Then  I  said,  'I  always  thought  that  you  were  my  friend,  but  you 
played  me  a  dirty  trick.  When  I  gave  you  that  plaa  that  appeared 
in  Monday  morning's  paper  I  gave  it  to  you  with  the  understand- 
ing it  was  strictly  confidential.  Now  I  find  you  are  around 
squealing  on  me/  He  said,  'Who  said  you  gave  that  story  to  me?* 
I  said,  'Didn't  I ?  Well,  who  did?  He  said,  It  was  given  to  me 
by  your  bankers.  It  came  from  them/ 

"So  you  see  that  on  Sunday  night  when  we  met  Hartfield, 
Reass,  Dwight,  myself  and  others,  they  were  cocksure  of  their 
position,  that  there  would  be  no  difficulty  with  the  trust  agree- 
nient,  and  promptly  on  Monday  morning  appeared  this  article  of 
tibe  dissolving  of  my  shares.  They  felt  that  they  had  captured 
these  companies — there  was  no  doubt  in  their  minds.  It  was 
probably  given  to  the  papers  Saturday  morning,  with  instructio'ns 
to  release  on  Monday  morning — too  late  to  recall,  because  otir 
conferoace  broke  up  about  midnight  and  the  Times'  was  already 
printed." 

Let  us  now  run  over  the  whole  chain  of  evidence  m  consecu- 
tive order,  from  December  3,  when  W.  F.  signed  the  voting  trust 
agreement  First,  Stuart  and  Qtterson  have  searched  the  pockets 
of  the  Fox  and  taken  out  Iris  $490,000  worth  of  life  insurance 


THE  TRAP  SHUTS  183 

money.  Second,  they  have  taken  $1,000,000  worth  of  Warners' 
notes  and  sold  them — something  he  could  just  as  well  have  done 
for  himself.  Third,  they  have  taken  about  $5,000,000  worth  of 
additional  collateral  from  him.  Fourth,  they  have  won  Sheehan, 
King  and  other  employees  away  from  him.  Fifth,  they  have- 
brought  Franklin  from  California,  to  make  him  president  of  Fox 
Theatres  in  W.  F/s  place.  Sixth,  they  have  decided  to  remove 
W.  F/s  brother-in-law  as  director  of  both  companies.  Seventh, 
they  have  told  Hartfield  that  they  are  going  to  remove  W.  F.  as 
president  of  both  companies,  and  that  the  wise  thing  for  him  to 
do  would  be  to  go  away  immediately  and  stay  for  six  months. 
Eighth,  they  have  given  the  New  York  "Times"  a  detailed  story 
to  the  effect  that  W*  F.'s  voting  shares  are  to  be  wiped  out,  and 
that  his  compensation  is  to  be  $2,700,000  worth  of  stock.  W.  F. 
decides  that  this  chain  of  evidence  is  conclusive,  and  that  he  will 
travel  no  further  under  the  guidance  of  such  "trustees/* 


REEL  SIXTEEN 
THE  FIEND  INGRATITUDE 

will  note  throughout  this  story  that  both  Stuart  and 
X  Otterson  apparently  considered  they  had  a  right  to  withdraw 
at  any  time.,  and  then  come  back.  They  would  say  that  they 
were  through  with  W.  F.  forever,  and  had  no  f ttrther  interest  in 
his  affairs,  and  then  the  next  day  they  would  expect  everything 
to  go  on  the  same  as  before.  Now  it  appeared  that  Richard 
Dwight  claimed  the  same  privilege;  on  Sunday  he  had  called 
everything  off,  and  on  Monday  he  appeared  with  a  letter  from 
Otterson,  agreeing  to  withdraw  as  trustee  as  soon  as  the  Tele- 
phone Company  had  got  back  its  $15,000,000. 

They  assumed  that  W.  F.  would  accept  that ;  not  knowing,  of 
course,  that  in  the  meantime  Hartfield  had  "spilt  the  beans/' 
Never  again  would  Stuart  and  Otterson  be  able  to  pose  as  friends 
of  the  Fox!  He  consulted  lawyers,  and  was  told  that  he  no 
longer  had  any  legal  obligation  under  the  trust  agreement,  but 
should  declare  the  agreement  at  an  end.  He  so  notified  Dwight, 
and  resisted  Dwighfs  arguments  and  importunities. 

The  first  consequence  of  this  refusal  was  that  he  received  a 
collective  letter  signed  by  the  six  principal  executives  of  his  two 
companies.  This  was  the  famous  "round-robin"  letter,  much 
exploited  in  the  press.  It  was  a  dignified  and  high-minded  com- 
munication, in  which  these  gentlemen  assured  their  chief  of  their 
deep  loyalty  both  to  him  and  to  the  companies.  They  pointed 
out  that  it  had  been  he  himself  who  had  announced  to  the  public 
the  trusteeship  plan  as  his  solution  of  all  the  troubles ;  and  now 
the  announcement  that  he  had  withdrawn  would  have  a  disastrous 
effect  upon  the  credit  of  the  companies. 

This  round-robin  letter  was  one  of  the  bitterest  things  that 
ever  came  to  W.  F.  It  was  not  the  product  of  sudden  impulse 
upon  the  part  of  these  six  gentlemen.  A  long  story  of  intrigue  lay 

184 


THE  FIEND  INGRATITUDE  185 

behind  it.  W.  F.  thinks  that  his  enemies  had  begun  the  process 
of  buying  his  executives  immediately  after  the  Wall  Street  panic; 
as  soon  as  the  bankers  had  realized  that  he  was  in  trouble,  and  that 
they  might  be  able  to  get  his  properties.  The  method  they  used 
was  a  different  one  in  each  case,  so  there  are  six  separate  stories, 
I  shall  tell  only  two,  which  are  of  special  importance. 

We  have  already  met  Saul  E.  Rogers,  vice  president  and 
general  counsel  of  Fox  Film  and  Fox  Theatres.  He  is  that 
lawyer  who  had  charge  of  the  negotiations  with  the  Government, 
and  to  whom  Thompson,  representing  the  Government,  gave  the 
assurance  that  the  merging  of  Fox  and  Loew's  would  be  per- 
mitted* He  is  the  person  who,  immediately  after  the  panic, 
Otterson.and  Stuart  insisted  must  be  eliminated  from  the  com- 
panies, and  who  W.  F.  insisted  should  be  retained.  Saul  E,  Rogers 
had  been  the  personal  attorney  of  William  Fox  since  about  1905. 
When  Fox  Film  was  organized  In  1915  he  became  its  general 
counsel.  His  salary  at  that  time  was  $30,000  a  year.  It  had 
been  raised  to  $60,000,  and  to  a  person  of  my  humble  notions 
that  would  seem  sufficient  to  live  on,  even  in  New  York.  But 
apparently  Rogers  had  not  found  it  so.  Says  W.  F. : 

"In  August,  1929,  a  month  after  my  accident,  Rogers  caHed 
at  my  home  at  Woodmere,  Long  Island,  and  informed  me  that 
his  contract  was  to  expire  on  December  31st  of  that  year,  and 
that  he  wanted  a  new  contract.  Fox  Film  had  acquired  the 
400,000  shares  of  Loew  stock  in  February,  and  had  as  yet  not 
merged  the  companies ;  in  fact,  we  had  been  informed  that  no 
consent  had  been  given  by  the  Government  to  the  acquisition  of 
these  400,000  shares.  Under  no  circumstances  could  the  Fox 
companies  get  along  without  the  services  of  Rogers,  to  be  a 
witness  as  to  the  acquisition  of  the  400,000  shares.  Fox  Film  or 
Fox  Theatres  could  not  afford  to  have  Rogers  become  forgetful, 
as  men  sometimes  do.  I  asked  him  what  salary  and  for  what 
period  he  wanted  a  new  contract.  He  wanted  $156,000  a  year, 
for  five  years,  and  he  was  not  requesting  it,  he  was  demanding  it ; 
I  could  hear  that  by  the  tone  of  his  voice.  There  was  a  dear 
indication  in  his  voice  on  what  he  was  basing  this  salary :  $60,000 
a  year  for  salary,  and  $96,000  for  remembering  that  Thompson 
told  him  to  acquire  the  400,000  shares  of  Loew  stock.  There  was 
no  use  discussing  the  price,  so  I  asked  him  to  draw  a  new  con- 


186     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

tract,  and  I  signed  this  contract,  I  considered,  under  duress.  I 
figured  I  would  argue  that  out  at  another  time,  when  the  Loew 
matter  was  settled ;  for  that  reason  I  never  submitted  that  con- 
tract to  the  Fox  Film  or  Fox  Theatres  board  of  directors,  and 
they  never  did  approve  the  contract. 

"When  the  company  got  into  these  difficulties,  I  sent  for 
Rogers  and  recited  the  fact  that  he  had  been  rny  personal  counsel 
for  twenty-five  years,  that  he  had  been  the  lawyer  of  these  com- 
panies from  their  very  inception.  The  mere  fact  that  some  of 
the  executives  were  not  going  to  stand  by  meant  nothing;  the 
oiae  man  I  had  a  right  to  expect  to  stand  by  was  himself.  Here 
was  a  chance  to  prove  I  had  not  made  the  wrong  selection  of  a 
lawyer  twenty-five  years  ago.  t 

"He  asked  me  to  tell  him  how  I  expected  to  get  out  of  this 
difficulty-  I  went  on  to  tell  him  of  at  least  six  different  methods. 
He  rejected  tbera  all ;  none  of  them  could  possibly  save  the  situ- 
ation, I  was  in  difficulty,  and  the  only  people  that  could  possibly 
sim*  the  situation  were  the  Telephone  Company  and  Halsey, 
Stuart,  and  I  ought  to  go  along  with  any  proposal  they  made. 
I  repeated  to  him  that  these  were  the  two  men  who  made  a 
condition,  the  very  first  time  we  met,  that  he  be  thrown  out; 
that  Otterson  disliked  him,  because  he  caused  the  infringement 
notice  to  be  sent  him,  and  that  Stuart  hated  him,  because  he  was 
insistent  that  Stuart's  lawyer  be  eliminated,  and  so  Stuart  thought 
he  was  insolent  These  people  had  charged  him  with  retarding 
my  progress,  and  I  had  defended  him  against  all  that.  I  said, 
'How  can  you  now  tell  me  that  these  are  the  people  I  must  ally 
myself  with ;  how  can  you  possibly  sell  your  soul,  which  you  have 
(feme?  Where  must  I  turn  now?  In  all  these  years  yot^\yere 
my  ommsei/  There  was  no  response  to  all  that,  and  without 
much  apology  or  ado  he  took  his  hat  and  coat  and  left ;  and  he 
became  one  of  the  six  signers  of  that  round-robin  letter.  In 
fact,  I  think  he  was  the  originator. 

"It  came  about  that  in  the  following  April,  after  Clarke 
bought  me  out,  Clarke  said  to  me:  'You  know,  Fox,  I  have 
enough  intelligence  to  know  that  you  have  been  shamefully  and 
brutally  treated  by  men  who  had  your  confidence*  These  men 
had  been  in  the  employ  of  your  company  since  its  very  inception, 
had  worked  themselves  up  into  these  high  posts,  and  then  double- 


THE  FIEND  INGRATITUDE  187 

crossed  you.  I  could  forgive  them  all  if  it  had  occurred  to  me, 
except  Rogers,  your  lawyer.  If  my  lawyer  did  that,  I  would 
kill  him  as  sure  as  God  made  little  green  apples.  I  don't  under- 
stand how  you  had  this  blind  faith  in  this  man,  and  why  you 
increased  his  salary  from  $60,000  to  $156,000.'  I  told  him  of 
the  necessity  of  doing  that ;  that  this  was  a  hold-tip  contract,  but 
that  I  had  no  choice,  and  I  told  him  of  the  fact  that  having  recog- 
nized it  at  the  time  I  had  signed  the  contract,  I  never  had  the 
contract  approved  by  the  board.  He  said:  'It  is  approved  by 
the  board ;  it  is  in  the  minutes.'  I  told  him  if  it  was  in  tfaesre, 
it  didn't  belong  there.  He  pointed  it  out  to  me  in  the  minutes. 

"I  then  sent  tor  the  former  directors  of  both  companies  and 
read  to  them  this  resolution.  They  informed  me  that  they  had 
never  heard  of  the  resolution ;  it  had  never  been  brought  up  in 
the  meeting.  I  asked  how  it  got  in  there — they  didn't  know.  Qm 
talking  later  to  one  of  my  confidential  men,  he  told  me  that  one 
of  my  employees,  a  lawyer  under  the  supervision  of  Rogers,  had 
had  the  minutes  changed  at  the  request  of  Rogers,  confirming 
Rogers*  contract  I  have  been  reliably  inf  orated  that  tibis  lawyer 
has  made  an  affidavit  in  which  he  acknowledges  the  fact 
he  had  these  minutes  changed  at  the  request  of  Rogens; 
sometime  in  February  he  had  rewritten  the  minutes  of 

"Of  course,  by  this  time  Clarke  was  through  witfi  Rogers, 
and  what  he  wanted  to  do  was  to  get  rid  of  him,  Clarke  wa$ 
frank  enough  to  say  to  me:  'You  don't  believe  I  am  going  to 
have  a  bit  of  faith  in  any  one  of  the  men  who  signed  the  rotiad- 
robin  letter,  do  you?  I  have  enough  sense  to  know  that  if  these 
men  doutrk-crossed  you,  they  would  soon  double-cross  me/ 

"Clarke  tolerated  Rogers  for  a  year  after  I  had  sold  out,  and 
then  one  morning  he  went  to  his  office  and  ptit  padlocks  on  the 
door.  When  Rogers  arrived  he  couldn't  get  in.  He  was  then 
told  that  his  services  were  no  longer  required — they  were  through 
with  him.  They  didn't  care  anything  about  the  five-year  contract 
Fox  had  given  him.  Rogers  is  now  suing  to  recover  on  that 
contract/' 

The  other  signer  of  the  round-robin  letter  whose  story  we 
must  bear  is  Wiflfidd  R.  Sheehan,  vice  president  and  g<e&eral 
manager  of  Fox  Film.  Sheehan  also  had  entered  the  fife  oi 
W.  F.  quite  early.  He  had  begun  as  a  reporter  for  the 


188     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

York  "World,"  and  had  become  private  secretary  to  Police  Com- 
missioner Waldo  of  New  York  City,  at  which  time  he  had  become 
a  friend  of  W.  F.  In  1910  or  1911  there  was  a  murder  brought 
about  by  the  graft  situation  In  the  police  department,  and  the 
newspapers  were  looking  for  a  "man  higher  tip"  in  the  depart- 
ment, and  were  beginning  to  mention  the  name  of  Sheehan. 
Sheehan  appealed  to  W.  F.  for  help,  and  W.  F.  took  him  into 
Waldo's  office,  and  asked  Waldo  whether  he  meant  to  stand  by 
Sheehan.  W.  F.  said  he  knew  that  Sheehan  had  nothing  to  do 
with  the  murder,  and  that  Waldo  must  know  it,  and  that  if 
Waldo  would  not  stand  by  Sheehan,  W.  F,  was  prepared  to 
spend  a  million  dollars  in  his  defense :  a  service  much  appreciated 
by  Sheehan  in  this  time  of  danger. 

'  I  have  before  me  some  clippings  from  the  New  York  news- 
papers of  September  to  November,  1912.  There  is  a  scandal  in 
the  police  department,  having  to  do  with  the  collection  of  graft 
for  promotions.  Winfield  R.  Sheehan,  secretary  to  Commissioner 
Waldo,  is  involved  in  these  scandals,  and  is  summoned  before  a 
committee  of  the  Board  of  Aldermen.  The  counsel  of  the  com- 
mittee asks  him  if  he  will  waive  immunity,  and  he  pretends  not 
to  understand.  He  says,  "I  haven't  asked  for  immunity  and  I 
do  not  want  it."  Says  Emory  R.  Buckner,  counsel  for  the  com- 
mittee, "That  answer  is  what  is  called  in  police  parlance  bunk. 
Now  I  ask  you  if  you  will  sign  away  your  immunity."  The 
discussion  continued: 

"  'I  don't  want  any  immunity/  the  witness  replied.  1  don't 
think  you  have  any  power  to  grant  immunity.' 

"  <The  committee  has  nothing  whatever  to  do  with  it,' 
Mr,  Buckner  declared,  'and  it  doesn't  make  any  difference  whether 
you  want  immunity  or  not.  If  you  are  sworn  by  this  committee 
and  testify,  you  get  immunity  automatically,  unless-  you  waive 
it.  Now,  are  you  willing  to  waive  it?' 

"  'No,  I  am  not/  the  witness  said. 

"  Then  you  think  that  if  you  are  indicted  by  anybody,  you 
might  need  the  immunity  you  would  get  here?' 

"  'I  won't  sign  a  waiver/  Mr.  Sheehan  declared/' 

In  April,  1914,  there  was  another  investigation  of  police  graft 
of  a  still  less  pleasant  sort.  In  the  New  York  "Time$"  for 
April  30,  1914,  I  find  these  headlines : 


THE  FIEND   INGRATITUDE  189 

CALLS  W.  R.  SHEEHAN  THE  MAN  HIGHER  UP. 

Alice  Walker  Testifies  She  Paid  Graft  to  Supposed 
Agent  of  Waldo's  Secretary. 

Alice  Walker,  it  appears,  was  the  keeper  of  a  house  of  prostitu- 
-,_jn,  and  she  testified  that  she  had  paid  $100  through  a  police 
agent,  who  told  her  that  he  represented  Sheehan. 

Sheehan  resigned  as  secretary  to  Waldo,  and  became  secre- 
tary to  William  Fox  at  a  salary  of  $100  a  week,  the  highest  he 
had  ever  earned.  Sheehan  proved  his  ability,  and  two  years  later 
was  made  vice  president  and  general  manager  of  Fox  Film  at  a 
salary  of  $20,000  a  year,  and  ten  years  later  was  earning  $45,000 
a  year,  in  charge  of  production  in  Hollywood.  At  the  time  of 
W.  F/s  troubles  his  salary  was  $130,000  a  year,  without  counting 
the  many  extras.  W.  F.  declares  that  he  had  made  him  personal 
gifts  of  many  thousands  of  W,  F/s  own  shares  of  stock.  At  the 
time  when  Durant  was  running  up  Fox  Film  in  the  market,  W.  F. 
called  Sheehan,  then  in  Hollywood,  on  the  long  distance  telephone 
and  said,  'Where  have  you  got  those  Fox  Film  shares?  Now 
is  the  time  to  cash  in/'  Sheehan  sold  his  shares,  the  greater 
portion  of  which  represented  W.  F/s  gift,  for  $1,450,000.  W,  F, 
declares  that  Sheehan  repaid  him  for  this  service  in  the  following 
way:  Sheehan  asked  W.  F.  to  lend  him  $400,000  and  invest  it 
for  him,  which  W.  F.  did.  Subsequently,  when  the  shares  went 
down,  Sheehan  denied  that  he  had  authorized  W.  F.  to  buy 
them. 

Winfield  R.  Sheehan  is  a  short  and  plump  gentleman  with 
blond  hair  and  prominent  eyes  of  a  color  which  his  press  agents 
describe  as  "baby  blue/'  He  is  a  jovial  person,  and  suffers  from 
liver  trouble.  In  October  of  1929  he  had  gone  abroad  for  his 
liver.  There  was  another  employe  of  W.  F/s,  one  Blumenthal, 
whose  story  we  shall  hear  in  a  moment,  also  in  England  at  the 
time  of  the  panic.  These  two  came  back  together,  arriving  in 
New  York  on  the  evening  of  the  signing  of  the  trust  agreement. 
Sheehan  and  Blumenthal  had  been  bitter  enemies,  but  now  they 
had  become  fast  friends,  and  W.  F.  speculates  as  to  what  they 
talked  about  on  the  boat.  Blumenthal  had  gone  over  to  the 
enemy,  and  did  he  point  out  to  Sheehan  that  W.  F.  was  to  be 
deposed,  and  that  there  would  be  a  new  president  of  Fox  Film, 


190     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

and  that  in  this  capacity  Sheehan  would  have  for  the  first  time 
an  opportunity  to  display  his  full  abilities? 

Anyhow,  it  was  a  new  Sheehan  who  landed  in  New  York. 
He  went  at  once  into  conference  with  Otterson  and  Stuart.  He 
spent  six  hours  with  them,  and  was  to  have  another,  conference 
with  them  the  following  day.  Naturally,  W.  F.  became  cc  - 
cerned.  He  thought  that  if  the  trustees  were  going  to  consult 
with  executives  of  the  companies,  the  third  trustee  should^  be 
present  When  he  learned  that  Stuart  and  Otterson  were  going 
to  throw  Jack  Leo  off  the  board,  but  retain  Sheehan  and  King, 
he  knew  that  Sheehan  and  King  had  gone  over  to  the  enemy. 
He  summoned  Sheehan  to  his  home,  and  Sheehan  said  he  had 
a  terrific  pain  in  the  back  of  his  head,  and  they  had  to  arrange 
a  place  for  him  to  lie  down.  Now,  as  W.  F.  looks  back  upon  it, 
he  strongly  suspects  that  the  purpose  of  that  headache  was  to 
enable  Sheehan  to  avoid  remembering  what  he  had  talked  about 
with  Otterson  and  Stuart. 

"I  said:  'Look  here,  Sheehan,  every  so  often  you  have  caused 
the  employes  and  executives  of  our  corporation  to  present  me 
with  testimonials  of  loyalty  and  devotion.  The  last  one  you  gave 
me  was  only  a  year  or  so  ago ;  it  was  printed  on  beautiful  paper, 
and  the  first  signature  on  it  was  yours,  and  the  testimonial  goes 
on  to  state  the  great  executive  head  that  I  am,  how  all  you  men 
appreciate  the  efforts  I  have  given  to  these  enterprises,  and  what 
I  have  done  for  you  all,  and  you  express  a  great  sentiment  of 
appreciation  and  loyalty.  When  these  were  given  to  me,  I  was 
proud  of  them,  but  this  last  one  has  really  been  of  little  or  no 
value,  for  it  was  during  prosperity  while  the  company  was  flour- 
islmig.  Now  we  appear  to  be  in  a  little  financial  difficulty;  now  I 
would  like  to  have  a  resolution  as  to  who  is  going  to  stand  by  and 
who  is  going  to  run  out.  I  want  you  to  call  the  executives  together 
and  propose  to  them  now  to  sign  a  letter  expressing  their  loyalty/ 

"He  said  he  didn't  think  it  was  practical  at  this  time ;  that  it 
would  be  a  mistake  on  my  part  to  try  to  get  it  I  said :,  1  don't 
want  to  make  an  effort  to  get  this.  I  never  did  before — it  always 
came  voluntarily.  This  is  the  first  time  I  have  asked  for  any 
support.'  It  was  apparent  that  there  was  to  be  no  such  con- 
ference of  executives,  and  if  there  was  to  be  an  executive  con- 
ference, Sheehan's  signature  would  not  be  on  any  stich  letter. 


THE  FIEND  INGRATITUDE  191 

That  further  confirmed  the  rumors  I  had  heard  about  him  and 
Otterson  and  Stuart/' 

This  was  the  bitterest  part  of  W.  F.'s  experience.  To  have 
these  men  who  had  been  his  intimates  turn  against  him,  one  by 
one,  and  join  the  conspiracy  of  his  enemies,  and  sign  their  names 
to  slanders  and  falsehoods  about  him!  In  the  course  of  this 
trouble,  the  New  York  "Evening  Telegram"  published  Sheehan's 
picture  on  the  first  page,  and  in  large  type  above  it  just  one 
word:  "INGRATE." 

There  seems  to  be  only  one  thing  more  to  s'ay,  to  state  the 
price  of  Sheehan's  services  to  the  enemies  of  W.  F.  Instead  of 
his  pittance  of  $130,000  a  year,  his  new  contract  with  Fox  Film 
Corporation,  made  after  W.  F.  was  out,  provided  for  $250,000 
the  first  year,  $300,000  the  second  year,  $350,000  the  third  year, 
$400,000  the  fourth  year,  and  $500,000  the  fifth  year.  If  you 
add  those  items  together  you  find  they  amount  to  $1,800,000, 
whereas  if  W.  F.  had  stayed  in  power,  Sheehan  would  have  had 
only  $650,000.  Says  W.  F. :  "Of  course  it  was  a  new  Sheehan !" 

While  we  are  on  the  subject  of  these  old-time  friends,  we 
have  to  make  the  acquaintance  of  one  more,  Alfred  Cleveland 
Blumenthal  by  name.  There  was  a  time  when  I  used  to  see  signs 
all  over  Los  Angeles :  "This  property  for  sale.  Apply  to  A.  C. 
Blumenthal."  If  you  applied,  you  met  a  little  man  well  under 
five  feet,  quite  pale,  and  feminine  in  appearance;  he  was  close 
to  fifty,  but  you  would  have  taken  him  for  thirty.  Looking  back 
on  him,  W.  F.  reports  that  he  is  as  sharp  as  a  steel  trap ;  he  deals 
very  much  in  innuendoes,  and  never  says  anything  kind  about 
anyone.  He  has  the  habit  of  telling  you  what  someone  has  said 
about  you,  and  whether  this  is  true  or  not,  it  causes  you  to  say 
what  you  think  about  the  other  person.  He  then  takes  this  back 
to  the  other  person,  and  causes  the  other  person  to  say  what  he 
thinks  about  you.  Thus  he  collects  a  great  deal  of  information. 

Blumenthal  came  to  New  York  and  appealed  to  W.  F.'s  sym- 
pathy. There  had  been  a  slump  in  Los  Angeles  real  estate,  and 
Blumenthal  had  been  wiped  out.  He  offered  W.  F.  a  ground 
lease  upon  some  land,  and  W.  F.  took  this  lease,  and  recently 
built  upon  the  spot  the  Los  Angeles  Theatre,  which  he  believes 
to  be  the  finest  in  the  world.  Blumenthal  had  the  idea  that  he 
might  arrange  for  W.  F.  to  buy  the  West  Coast  theatres;  but 

14 


192     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

before  he  could  deal  for  them  he  had  to  have  his  debts  paid  off. 
He  owed  hundreds  of  small  creditors,  the  total  amount  being  over 
$50,000,  W.  F.  put  up  the  money  out  of  his  own  pocket,  and 
paid  Blumenthars  debts,  and  they  formed  what  they  called  the 
Foxthal  Company,  with  Blumenthal  having  a  half  interest,  and 
Fox  Theatres  having  the  other  half.  This  company  was  to  get 
all  the  commissions  which  Blumenthal  might  earn  in  purchasing 
theatres  or  stocks  of  theatrical  corporations.  What  this  amounted 
to  was  an  arrangement  whereby  Blumenthal  was  to  act  as  a  real 
estate  agent  for  Fox  Theatres,  getting  half  the  commissions 
himself  and  giving  the  company  the  other  half. 

Blumenthal  of  course  was  extremely  grateful,  and  became  a 
friend  of  the  Fox  family.  He  took  to  addressing  Mrs.  Fox  as 
"mother/'  which  conferred  an  air  of  respectability  upon  him. 
To  the  Fox  family  he  became  "Blumy,"  and  when  Blumy's 
mother  was  about  to  return  to  California  and  told  Mrs.  Fox  that 
the  next  day  was  her  birthday,  and  that  she  was  to  spend  it  on 
the  train,  Mrs.  Fox  and  her  husband  proceeded  to  get  a  New 
York  jeweler  on  the  telephone,  it  being  Sunday,  and  the  jeweler 
came  and  opened  his  store,  and  Mrs.  Fox  selected  a  bracelet  cost- 
ing $10,500,  and  W.  F.  paid  for  it  as  a  birthday  gift  for  Mrs, 
Blumenthal. 

Many  important  deals  were  put  in  Blumy's  way,  and  every- 
thing went  pleasantly — except  that,  so  W.  F.  declares,  Blumy 
had  a  way  of  finding  an  excuse  to  hold  out  his  commissions. 
He  always  needed  the  money  for  some  purpose  or  other,  and 
the  Fox  Theatres  Corporation  would  get  it  later.  It  was  Blumy 
who  got  word  that  Schenck  was  willing  to  sell  the  Loew  shares, 
and  W.  F.  arranged  for  Fox  Theatres  to  pay  the  Foxthal  Com- 
pany $3  a  share  on  the  400,000  shares,  which  meant  $600,000  in 
Blumy's  pocket.  Later  on  W.  F.  decided  to  buy  a  chain  of 
New  York  theatres,  and  he  turned  this  job  over  to  Blumy,  and 
Blumy*s  commission  was  a  million  and  a  quarter.  Then  came 
Ostrer  to  New  York,  and  Blumy  got  in  on  that,  and  was  to  go 
to  London  to  conclude  the  negotiations.  W.  F.  suggested  that 
before  he  went  he  should  give  the  Foxthal  Company  an  account- 
ing, but  Blumy  gave  the  excuse  that  the  British-Gaumont  pur- 
chase was  very  urgent,  and  he  went  to  England  and  earned  a 
commission  there  of  a  million  and  a  quarter.  Altogether  he  owed 


THE  FIEND  INGRATITUDE  193 

the  Foxthal  Company  close  to  $3,000,000.  Of  course  if  it  should 
happen  that  somebody  would  offer  him  an  opportunity  to  escape 
having  to  pay  all  that  money,  Blumy  would  be  strongly  tempted 
to  favor  that  person. 

After  the  panic,  W.  F.  was  asleep  in  his  bed,  and  woke  up 
with  a  yell.  His  wife  asked  what  was  the  matter,  and  he  told 
her  he.  had  just  dreamed  that  Blumy  had  double-crossed  him. 
But  Mrs.  Fox  said  for  him  to  go  back  to  bed  and  stop  dreaming. 
She  said,  "All  the  others  that  you  have  faith  in  may  double-cross 
you,  but  never  Blumy."  She  looked  upon  him  as  if  he  were  her 
son.  But  W.  F.  and  his  wife  had  had  psychic  experiences 
before,  so  the  next  day  W.  F.  decided  to  make  a  test.  He  tele- 
phoned to  London,  and  said  to  Blumenthal  that  there  was  serious 
trouble  in  New  York,  and  Blumenthal  had  close  to  $3,000,000, 
half  of  which  belonged  to  Fox  Theatres ;  would  he  please  cabk 
it,  because  it  was  badly  needed. 

"He  said  yes,  he  would  do  it  tomorrow.  But  tomorrow — 
no  money.  Again  I  telephoned.  He  was  just  making  up  the 
accounts;  tomorrow.  .But  tomorrow,  no  money.  I  said  to  Mrs- 
Fox,  'We  have  been  double-crossed.  That  was  no  dream  at  all/- 
I  soon  got  the  kind  of  cables  from  Blumenthal  that  indicated 
clearly  he  was  acting  under  an  assignment  from  the  Telephone 
Company;  that  he  had  a  mission  to  perform  over  there." 

That  was  the  time  while  Sheehan  was  in  London,  having  his 
liver  cured,  and  during  one  of  the  telephone  calls,  Blumenthal 
said :  "Here  is  Sheehan  sitting  alongside  me.  Do  you  want  to  talk 
to  him,"  That  sounded  strange  to  W.  F.,  because  if  ever  two  men 
hated  each  other,  it  was  Blumenthal  and  Sheehan.  Sheehan  was 
always  saying,  "He  is  going  to  double-cross  you."  But  now  here 
they  were  friends,  and  they  came  back  from  England  together. 
Blumenthal  had  gone  in  July,  in  a  great  hurry,  and  he  and  his 
wife  had  taken  just  a  couple  of  suit-cases.  Says  W.  F. : 

"This  night  when  he  returned  to  the  Ambassador  Hotel,  vans 
stopped  and  eighteen  or  twenty  trunks  came  in.  I  was  meeting 
a  new  Blumenthal.  I  naturally  felt  that  the  first  thing  he  would 
do  would  be  to  tell  me  about  the  things  that  had  transpired. 
Instead  he  begged  to  be  excused — he  must  have  dinner,  and  then 
he  wanted  to  do  some  unpacking.  He  couldn't  any  longer  look 
me  in  the  eye.  I  knew  that  night  dearly  that  Blumenthal  was 


194     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

no  longer  for  me,  but  was  in  the  employ  either  of  the  Telephone 
Company  or  Harley  Clarke. 

"It  appears  I  made  the  right  guess,  because  sometime  later, 
maybe  several  months  later,  Blumenthal  called  to  see  me  and 
one  of  my  attorneys  at  the  Ambassador  Hotel,  and  said  that 
what  he  would  like  to  do  was  to  acquire  the  voting  shares  of 
Fox ;  that  on  his  word  of  honor  he  was  not  to  receive  a  penny 
of  commission  on  this  transaction.  He  just  wanted  to  be  of 
help.  When  the  thing  was  finally  concluded,  we  learned  that 
all  the  time  he  had  had  a  contract  in  his  pocket  signed  by  Clarke 
to  pay  him  5  per  cent  up  to  $12,000,000  as  a  commission  if  he 
could  induce  Fox  to  sell  his  shares.  Certainly  he  was  employed 
by  Clarke  now.  It  is  clear  to  me  now  the  purpose  of  that  con- 
nection. If  Fox  remained  in  business,  Blumenthal  would  have 
to  return  half  of  the  $3,000,000;  if  Fox  went  out  of  business  he 
would  have  an  arrangement  with  Clarke  that  the  entire  $3,000,000 
belonged  to  him.  Not  only  didn't  he  return  any  part  of  the 
$3,000,000  he  had  in  his  pocket,  but  sometime  thereafter  Clarke 
made  a  settlement  with  him  and  paid  him  an  additional  $500,000 
by  note,  the  greater  part  of  it  yet  unpaid. 

"Soon  after  I  sold  out,  I  wrote  Qarke  a  letter  and  told  him 
I  wanted  him  to  know  the  relationship  between  Blumenthal  and 
the  Fox  companies.  I  recited  our  relationship  and  warned  them 
against  giving  Blumenthal  any  part  of  this  money,  and  that  I, 
Fox,  as  director  of  the  company,  was  demanding  that  the  proper 
settlement  be  made  by  Blumenthal — all  of  which  wa,s  disregarded, 
because  there  was  an  agreement,  there  must  have  been  an  under- 
standing that  Blumenthal  could  keep  this  money." 

At  the  time  of  Blumy's  return  from  London,  he  still  owed 
his  friend  W.  R  $40,000  out  of  the  $50,000  which  had  been  put 
up  to  pay  his  personal  debts.  Also  he  owed  the  Foxthal  Company 
$3,000,000,  of  which  half  was  to  go  to  Fox  Theatres ;  and  W.  F. 
was  desperately  combing  the  city,  trying  to  borrow  as  few  hun- 
dred thousand  here  and  a  few  hundred  thousand  there  to  meet 
his  obligations.  There  was  a  note  due  and  payable  at  a  bank 
in  Boston,  on  a  contract  which  Blumenthal  had  consummated, 
and  W.  F.  didn't  want  that  note  to  go  to  protest. 

This  was  while  he  was  home  ill,  early  in  December,  and 
Mrs.  Fox,  having  heard  the  whole  story,  decided  to  send  for 


THE  FIEND  INGRATITUDE  195 

the  man  who  had  been  calling  her  "mother"  for  so  many  years. 
He  came,  and  W.  F.  had  an  interview  in  his  sick  room,  and  asked 
Blumy  to  return  the  money  which  belonged  to  Fox  Theatres. 
Blumy  said  he  wouldn't  do  it.  Then  W.  F.  asked  that  he  repay 
the  $40,000  of  the  personal  loan.  This  Blumy  said  he  would  do. 
Then  W.  F.  asked  that  he  lend  $400,000  temporarily,  so  that 
W.  F.  could  meet  the  note  of  the  bank  in  Boston.  Blumy  refused. 

W,  F.  didn't  know  that  his  wife  was  standing  behind  the 
door,  listening  to  this  conversation.  But  now  he  heard  a  sound 
behind  the  door,  and  he  guessed,  and  ran  out  of  the  room,  and 
found  his  wife  standing  there  with  a  bottle  of  vitriol  in  her 
hand.  Mrs.  Fox  told  me  how  she  had  bought  this,  because  she 
had  become  convinced  that  her  husband  was  going  to  be  killed 
in  this  terrible  struggle,  and  she  did  not  mean  to  survive  him. 
But  now,  listening  to  this  man,  Blumy,  and  realizing  the  extent 
of  his  perfidy,  she  said:  "I  am  going  to  blind  him.  This  dog 
who  has  called  me  mother — if  he  is  going  to  destroy  my  husband, 
I  am  going  to  destroy  him." 

There  was  not  much  of  an  argument.  W.  F.  pushed  her  into 
a  room  by  force,  and  locked  her  in,  and  then  got  rid  of  Blumy 
as  quickly  as  possible.  Wherever  Blumy  may  be,  when  he  reads 
this  story,  he  will  be  interested  to  know  what  a  close  escape  he 
had. 

Just  one  more  detail,  and  then  we  are  through  with  this  little 
gentleman.  In  April,  when  W.  F.  was  finally  forced  to  sell  out 
to  Harley  Clarke,  he  went  to  Clarke's  office,  and  there  was 
Blumenthal.  W.  F.  tells  of  the  scene: 

"I  said  to  Clarke:  'I  didn't  know  you  were  going  to  have 
this  man  here,  but  now  he  is  here  I  have  some  questions  I  would 
like  to  ask  him  in  your  presence.  I  don't  know  what  he  has 
told  you  about  me,  but  I  would  like  to  tell  you  something  about 
him.  Before  he  gets  in  your  good  graces,  you  had  better  hear 
from  my  lips  just  what  he  is.  After  I  get  through  telling  it  to 
you,  you  will  throw  him  out  of  this  room,  because  if  you  don't, 
there  will  be  no  deal/  Then  I  proceeded  to  tell  Clarke  what  I 
thought  of  Blumenthal  and  how  he  had  withheld  money  that 
belonged  to  these  companies.  At  the  conclusion  of  this  I 
demanded  he  be  ordered  out,  which  he  was.  Clarke  was  not 
going  to  lose  this  deal  with  me." 


REEL  SEVENTEEN 
BANK  SOLIDARITY 

WF.  realized  now  that  he  had  lost  the  eminent  firm  of 
•  Hughes,  Sckurman  &  Dwight,  and  was  soon  to  lose  Colonel 
Hartfield.  He  must  have  another  lawyer,  and  he  chose  Clarence 
J.  Shearn,  who  had  until  recently  been  a  judge  of  the  Appellate 
Division,  and  before  that,  had  been  counsel  for  William  Randolph 
Hearst.  Judge  Shearn  is  a  very  little  man,  frail  and  slender,  clean 
shaven  and  extremely  nervous ;  he  has  a  kind  face  and  is  sympa- 
thetic, and  readily  expresses  his  sympathy.  He  was  brought  to 
W.  F.'s  home  by  Reass  on  a  Sunday  afternoon,  and  listened  to 
W.  F/s  story,  and  was  so  much  interested  that  he  called  off  a  din- 
ner engagement  and  spent  the  evening.  He  begged  W.  F.  not  to 
tell  his  story  to  anyone  else,  because  the  telling  was  emotionally  so 
destructive  to  him.  Shearn  himself  had  recently  lost  his  wife, 
and  said  he  was  so  depressed  that  he  had  planned  a  six  months' 
trip  around  the  world;  but  he  decided  that  he  could  just  as  well 
forget  his  troubles  by  fighting  W.  F/s  battles,  and  he  went  to 
work  on  the  case  the  very  next  day. 

That  was  December  23, .  and  there  was  a  meeting  of  the 
bankers  at  the  office  of  the  Telephone  Company.  .  Shearn 
addressed  this  meeting,  and  told  the  bankers  that  W.  F.  had 
neither  moral  nor  legal  obligation  to  go  on  with  the  voting  trust 
agreement.  He  pleaded  with  the  bankers  to  extend  the  loans, 
which  amounted  to  about  $6,800,000  unsecured.  He  pleaded,  and 
W.  F.  also  pleaded,  with  the  balance  sheets  of  his  companies 
before  him.  He  showed  that  the  companies  had  properties  against 
wliich  there  were  no  mortgages,  and  with  a  value  of  approxi- 
mately $20,000,000.  Said  W.  F. :  "Gentlemen,  doesn't  it  seem 
peculiar  to  find  a  man  with  $20,000,000  worth  of  valuable  prop- 
erty, and  not  able  to  raise  any  money  ?  I  would  like  to  make  you 
a  proposal,  Since  the  voting  trust  agreement  has  been  abro- 

196 


BANK  SOLIDARITY  197 

gated,  the  only  interest  you  can  possibly  have  is  for  these  com- 
panies to  return  the  money  that  is  due  you.  We  can't  give  it  to 
you  in  cash,  we  haven't  got  it.  What  we  have  got  is  $20,000,000 
worth  of  property  unencumbered.  You  form  a  committee  amongst 
yourselves,  and  you  have  that  committee  pick  out  of  it  $2  worth 
of  collateral  for  every  dollar  we  owe  you.  We  will  make  you  a 
secured  creditor.  Instead  of  your  bank's  money  being  in  jeopardy, 
we  want  to  guarantee  now  that  we  are  going  to  pay  it." 

'  The  dominating  factor  at  this  meeting  was  Sherrill  Smith,  one 
of  the  vice  presidents  of  the  Chase  National  Bank.  For  some 
mysterious  reason,  Chase  National  was  recognized  as  the  leader 
of  the  pack,  and  every  time  W.  F.  or  Shearn  made  a  point,  Smith 
would  find  some  technical  or  legal  objection.  Because  of  the  fact 
that  the  Fox  companies  owed  twelve  million  to  Halsey,  Stuart, 
they  could  not  give  their  properties  as  collateral.  But  there  was 
nothing  in  the  agreement  with  Halsey,  Stuart  to  forbid  this.  The 
agreement  forbade  only  new  obligations;  it  did  not  forbid  col- 
lateral to  cover  old  obligations.  But  everybody  agreed  with  Smith; 
they  would  not  take  collateral  for  their  loans,  and  it  was  plain 
enough  that  they  were  all  under  orders.  Says  W.  F.  : 

"This  meeting  was  really  a  great  farce.  The  session  opened 
with  Dwight  announcing  that  under  the  circumstances  of  my 
attitude  and  my  actions,  the  trustees  wished  to  withdraw.  Some 
of  the  banks  who  had  not  been  in  the  full  confidence  of  the  Tele- 
phone Company  inquired  why  Fox  was  asking  for  the  voting  trust 
agreement  to  be  abrogated.  I  suggested  to  Dwight  that  he  tell 
them  why.  I  said :  'They  asked  for  it — tell  it  to  them.'  But  no, 
he  would  rather  not;  in  fact  he  wouldn't.  I  said:  'Gentlemen, 
we  are  in  the  offices  of  the  Telephone  Company,  and  they  know 
the  reason  why  I  am  withdrawing  from  this  as  well  as  I,  and  I 
feel  it  is  their  obligation  to  tell  it  to  you.  You  came  at  their 
invitation.  If  they  don't  tell  it  to  you,  I  won't.  But  they  know 
why,  and  let  them  tell  it  to  you/  They  never  told  why/* 

W.  F.  then  went  home  and  wrote  a  letter  to  the  thirteen  banks 
which  were  his  creditors,  renewing  his  off er  to  put  up  collateral. 
This  letter  brought  no  help,  so  he  requested  another  bankers* 
meeting,  this  time  at  his  own  offices  on  January  2.  He  again 
reiterated  his  offer  to  give  $2  worth  of  collateral  for  each  dollar's 
worth  of  loans,  but  all  in  vain.  On  January  5,  Heppenheimer  and 


198     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Marcus,  two  presidents  of  creditor  banks,  came  to  W.  F.  and 
informed  him  that  it  was  the  intention  of  the  banking  creditors 
to  apply  to  the  courts  to  appoint  a  receiver  for  the  Fox  companies. 

On  January  6,  W.  F.  made  a  new  proposition :  since  the  banks 
were  unwilling  to  take  property  of  Fox  Film  and  Fox  Theatres, 
would  they  take  the  personal  property  of  W.  F.  as  collateral  ?  He 
had  millions  of  dollars  worth  of  real  estate  scattered  throughout 
the  country.  He  was  trying  to  sell  it  but  couldn't.  He  now 
offered  it  as  collateral,  but  in  vain.  Nobody  wanted  any  prop- 
erty belonging  to  Fox.  For  some  reason  or  other,  it  was  all 
poison.  The  banks  demanded  their  money,  and  if  Fox  couldn't 
pay  their  money,  they  wanted  to  throw  the  companies  into 
receivership  and  ruin  them. 

You  will  remember  my  reference  to  Paley's  famous  watch 
which  is  found  on  the  seashore,  and  which  proves  that  a  man  has 
been  there;  the  man  in  turn  proving  that  there  is  a  God  who 
created  the  universe.  Observe  now  the  complete  harmony  of 
action  of  thirteen  New  York  bankers  attending  business  con- 
ferences and  writing  letters.  Normally  no  banker  ever  refuses 
to  accept  collateral  for  a  loan.  Some  one  banker  may  refuse  to 
extend  a  loan  which  is  properly  secured,  but  thirteen  bankers  do 
not  all  unite  and  refuse  to  extend  loans  which  are  properly 
secured,  unless  there  is  some  powerful  motive,  some  powerful 
force  which  brings  about  that  solidarity.  W,  F.  tells  of  visiting 
executives  of  many  banks,  and  they  were  all  personally  friendly, 
but  no  one  of  them  would  lend  him  a  dollar,  and  no  one  would 
extend  a  note.  One  of  the  bank  presidents  went  so  far  as  to  tell 
him  confidentially  that  he  would  like  to  do  something,  but  that 
his  hands  were  tied. 

"He  told  me  he  couldn't  do  anything  except  what  the  Chase 
Bank  was  asking  to  be  done ;  that  the  Chase  Bank  was  the  leader 
in  this  movement;  that  regardless  of  what  his  attitude  was  in 
these  bankers'  meetings,  I  would  have  to  understand  that  it  was 
not  what  he  wanted  to  do,  but  what  he  was  compelled  to  do." 

One  of  the  creditors  was  Edward  Rothschild,  president  of  the 
Chelsea  Bank.  He  was  the  employer  for  whom  W.  F.  had  been 
working  for  a  salary  of  $17  a  week,  three  years  prior  to  his 
marriage.  So  for  thirty-one  years  W.  F.  had  been  his  friend, 
and  he  had  watched  the  great  enterprise  grow.  He  had  loaned 


BANK  SOLIDARITY  199 

money  to  Fox  Film,  and  also  to  Fox  personally.  The  personal 
loan  was  never  pressed ;  Rothschild  said  that  he  couldn't  do  what 
he  wanted  to  about  Fox  Film,  but  he  offered  W.  F.  a  receipted 
bill  for  the  personal  loan  if  he  wanted  it, 

"Rothschild  did  more  than  that.  He  asked  me  to  come  to  his 
apartment  one  day,  and  he  had  a  group  of  men  in  the  room.  He 
inquired  of  me  how  could  he  be  of  financial  service  to  me.  I 
told  him  that  what  I  would  like  to  do  would  be  to  take  these 
280,000  odd  shares  in  the  hands  of  brokers  and  park  them  some- 
where; that  I  was  willing  to  pay  a  substantial  price  for  the 
accommodation;  that  I  would  like  to  have  someone  buy  these 
shares  for  $50  a  share,  with  an  agreement  that  the  Fox  companies 
would  have  the  right  to  recapture  these  shares  with  a  premium 
of  $10  on  or  before  a  year  from  the  date  that  they  were  acquired 
from  us.  In  addition  to  that  to  pay  6  per  cent  per  annum  for-the 
loan.  If  the  companies  had  the  ability  to  re-acquire  these  shares 
at  the  end  of  twelve  months,  it  would  net  the  bankers  26  per  cent 
per  annum.  I  was  to  pay  $10  a  share  premium  for  the  recapture 
of  these  shares  any  time  during  the->ear. 

"I  naturally  had  the  fondest  hopes  that  I  could  work  this 
thing  out  in  three  months  or  perhaps  six  months  at  the  longest 
If  I  could  work  these  difficulties  out  ffi  three  months,  the  banks 
would  earn  approximately  80  per  cent  profit  in  three  months,  or 
40  per  cent  in  six  months.  The  proposition  surely  was  attractive, 
and  this  group  pf  men  thought  they  could  swing  this  deal.  They 
did  take  it  up  with  Field,  Glore  &  Company.  A  mutual  friend, 
who  was  present  at  the  meeting  when  this  proposition  was  being 
discussed  with  Field,  Glore  &  Company,  reported  that  the  mem- 
bers of  this  bank  were  willing  to  go  forward.  The  deal  looked 
like  it  was  going  to  be  consummated.  There  was  no  reason  why 
this  was  not  a  good  piece  of  banking  business,  and  while  the  con- 
ference was  at  its  height,  one  of  the  bankers  was  called  to  the 
'phone,  someone  from  Morgan  &  Company  was  on  the  wire.  He 
left  the  room  for  less  than  five  minutes,  and  when  he  returned  he 
had  no  interest  in  the  matter.  He  was  sorry,  but  his  firm  had 
no  interest. 

"Of  course,  it  was  commonly  known  by  Field,  Glore  &  Coin- 
pany  that  this  proposal  was  being  made  by  my  friend,  Rothschild. 
Whether  or  not  the  closing  of  his  bank  shortly  thereafter,  and 


200     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

then  the  opening  of  the  bank  shortly  after  that  with  Rothschild 
entirely  eliminated  from  the  bank,  had  anything  to  do  with  his 
wanting  to  help  me,  I  don't  know.  Offhand,  I  would  say  that 
that  was  the  price  he  paid  for  his  willingness  to  help  Fox. 

Another  curious  story  about  a  creditor,  the  Bank  of  the  United 
States,  to  which  Fox  Film  owed  $1,600,000  unsecured,  and  W.  F. 
personally  owed  $1,000,000  secured.  Marcus,  the  president  of 
that  bank,  told  W.  F.  that  he  could  not  help  so  far  as  concerned 
the  Fox  Film  loan,  but  as  to  the  personal  loan  W.  F.  need  not 
worry. 

"Somehow  or  other  the  Chase  Bank  did  discover  that  I  had 
a  personal  loan  at  that  bank,  and  shortly  thereafter  I  met  with 
Marcus,  and  he  informed  me  that  for  reasons  he  was  unable  to 
name,  it  became  necessary  for  me  to  supply  more  collateral.  I 
could  understand  that,  and  deposited  more  collateral,  and  again 
he  informed  me  that  that  was  not  sufficient,  and  that  for  reasons 
he  was  unable  to  explain  I  must  give  him  more  collateral.  He 
thought  his  bank  needed  at  least  $500,000  more  collateral.  I  told 
him  of  two  pieces  of  property  I  owned — in  one  I  had  an  equity  of 
$600,000  and  the  other  was  a  piece  of  property  for  which  Rocke- 
feller had  offered  $1,450,000,  and  which  had  mortgages  of  a  little 
less  than  $625,000.  I  told  him  to  take  his  choice.  He  said  that 
what  he  would  have  to  do  would  be  to  have  these  properties 
appraised,  and  then  he  would  make  his  choice.  Day,  a  prominent 
t^eal  estate  man  in  New  York,  appraised  these  two  pieces  of  prop- 
erty. On  his  appraisal  there  was  no  more  than  $500,000  equity 
in  both.  I  put  up  both  pieces  of  property  as  collateral. 

"In  the  spring  of  1931  I  met  Day — that  was  after  the  Bank 
of  the  United  States  had  closed  its  doors.  I  said:  'When  I  was 
in  difficulty  you  had  a  chance  to  serve  me  and  you  didn't  do  it. 
You  were  elected  as  an  appraiser  of  two  pieces  of  property  I  had.' 
He  s^id:  *I  knew  all  about  them.  I  will  frankly  tell  you  about  it. 
I  had  had  business  arrangements  with  Marcus  in  every  real  estate 
enterprise.  When  he  asked  me  to  make  these  appraisals,  he  told 
me  the  exact  amount  he  wanted  these  appraisals  for/ 

"I  said:  'You  must  have  known  their  value,  because  Rocke- 
feller had  already  announced  that  he  was  building  the  Rockefeller 
Center,  and  that  I  owned  the  only  110  feet  of  property  that  was 
not  included  in  his  purchase.  You  must  have  jknown  the  real 


BANK  SOLIDARITY  201 

value  of  that  lot.  You  must  have  known  that  I  had  an  equity  of 
more  than  $800,000  above  the  mortgage/  He  said:  'Yes,  I  know, 
but  Marcus  told  me  the  amount  he  wanted  these  properties 
appraised  at,  and  I  appraised  them  that  way/  Perhaps  he  could' 
justify  his  appraisal  by  saying  he  was  not  concerned  in  the  Rocke- 
feller Center ;  that  he  was  only  concerned  in  that  piece  of  prop- 
erty on  that  day  regardless  of  the  Rockefeller  interests. 

"This  was  Marcus  who  at  the  beginning  of  this  transaction 
expressed  a  spirit  of  friendship ;  it  was  he  who  recommended  that 
I  engage  Colonel  Hartfield  as  my  lawyer ;  it  was  he  who  continued 
the  $1,000,000  loan  when  it  was  uncollateralized.  Whether  he 
was  punished  for  that  by  the  closing  of  his  bank  later,  I  don't 
know.  But  it  is  strange  that  the  only  two  banks  of  the  thirteen 
banks  I  was  associated  with,  and  which  had  my  personal  loans, 
had  their  doors  closed  shortly  after  I  sold  out." 

Since  I  have  referred  to  the  piece  of  real  estate  in  Rockefeller 
Center,  let  me  complete  this  curious  story.  The  property  is  on 
Sixth  Avenue,  between  48th  and  49th  Streets,  and  is  included 
in  three  square  blocks  bought  by  Rockefeller,  on  which  the  new 
Radio  City,  or  Rockefeller  Center,  is  being  built.  Just  before 
the  panic,  the  representatives  of  Rockefeller  tried  to  buy  this 
property,  offering  $1,450,000  for  it,  but  W.  R  refused,  because 
he  thought  it  would  be  a  good  thing  to  have  a  building  on  that 
site  and  call  it  the  Fox  Building. 

But  then  came  the  panic  and  all  the  troubles,  and  W.  F.  sent 
for  the  head  of  his  real  estate  department  and  said,  "All  right, 
I  will  sell  that  piece  of  property  for  $1,450,000."  But  then  it 
turned  out  that  the  offer  was  withdrawn ;  the  maximum  price  was 
$800,000,  which  was  only  a  little  more  than  the  mortgage.  The 
Fox  was  down,  and  Rockefeller  also  was  going  to  take  a  bite 
out  of  him. 

While  we  are  moving  in  such  distinguished  company,  let  me 
tell  also  the  story  of  the  Honorable  Reginald  McKenna,  formerly 
First  Lord  of  the  Admiralty,  then  Home  Secretary,  then  Chan- 
cellor of  the  King's  Exchequer,  and  now  Chairman  of  the  Mid- 
land Bank,  one  of  the  five  great  banking  chains  which  rule  Great 
Britain.  This  eminent  British  statesman  and  financier  had  been 
interested  in  the  Ostrer  deal,  and  had  loaned  £800,000  to 
make  the  deal  possible.  Also,  at  the  instance  of  W,  F/s  agent, 


202     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

he  had  purchased  6,000  shares  of  Fox  Film  for  $150,000.  As 
soon  as  the  panic  came,  McKenna  became  disturbed  and  asked  to 
be  relieved  of  his  purchase.  W.  F.  remembered  the  £800,000, 
and  returned  the  $150,000  at  once. 

But  then  on  December  30,  1929,  the  £800,000  was  due, 
and  W.  F.,  having  called  off  the  voting  trust  agreement,  no  longer 
had  any  credit  in  London.  He  sent  a  cablegram  to  McKenna, 
a  copy  of  which  I  have.  It  gives  a  detailed  statement  of  the 
financial  position  of  the  Fox  companies,  their  earnings  and 
resources  and  lack  of  obligations.  It  is  a  most  eloquent  cable- 
gram, and  may  have  shocked  a  reticent  and  prudent  Englishman 
by  its  extravagance,  for  it  contained  close  to  700  words,  and  cost 
about  $150.  The  reply  came  promptly,  and  read  as  follows: 
"Telegram  received  but  bill  must  be  met  today.  McKenna/* 

W.  F.  asked  me  what  I  thought  of  that  reply,  and  I  said  that 
the  Englishman  also  could  be  accused  of  extravagance ;  the  first 
three  words  of  the  cablegram  were  superfluous.  W.  F.  calls  my 
attention  to  the  intimacy  of  relationship  between  the  Chase  Bank 
and  the  Midland.  They  were  associated  in  many  American  enter- 
prises, and  McKenna  and  Wiggin  were  intimates.  Also  Stuart 
and  Clarke  had  told  W.  F.  of  their  close  friendship  with  the 
great  British  statesman  and  financier. 

The  bill  was  not  met  that  day,  and  McKenna  proceeded  next 
day  to  attach  all  the  funds  of  Fox  Film  in  London.  At  this  time 
you  must  understand  the  weekly  business  of  Fox  Film  in  Eng- 
land amounted  to  about  $100,000,  and  three-fourths  of  this 
amount  was  being  cabled  to  America  each  week.  W.  F.  had 
offered  to  liquidate  the  loan,  on  the  basis  of  the  difference  between 
the  English  income  and  expenses.  If  McKenna  had  consented 
to  do  that,  the  $4,000,000  would  have  been  paid  off  in  twenty-five 
weeks.  But  that  was  not  satisfactory  to  him;  he  preferred  to 
bring  legal  proceedings  and  cripple  the  American  organization. 

He  went  farther,  and  instructed  the  Hon.  John  W.  Davis  to 
commence  an  action  in  New  York.  Oddly  enough,  he  claimed 
the  full  £800,000,  without  making  any  allowance  for  the  amount 
that  he  had  already  got  by  attaching  the  Fox  Film  money 
in  England.  This  was  extremely  fortunate  for  W.  F.,  for  if 
McKenna  had  sued  only  for  the  money  that  was  actually  due, 
W.  F/s  lawyers  could  not  have  filed  an  answer;  but  as  he  sued 


BANK  SOLIDARITY  203 

for  too  much,  it  was  possible  to  file  an  answer,  and  thus  keep  the 
suit  from  coming  to  trial  for  a  long  time. 

Also,  there  was  the  great  National  City  Bank  of  New  York. 
This  great  bank  has  branches  all  over  the  world,  and  W.  F.  was 
one  of  their  depositors  all  over  the  world.  They  showed  their 
appreciation  of  his  business,  and  their  desire  to  assist  his  com- 
panies, by  attaching  all  the  money  which  the  companies  had  on 
deposit  all  over  the  world,  and  applying  this  money  week  by 
week  to  $400,000  which  W.  F.  owed  in  New  York.  This,  of 
course,  was  intended  to  cripple  the  business  abroad,  since  the 
companies  had  to  have  their  foreign  money  to  pay  their  foreign 
debts ;  but  the  fact  was  that  Fox  Film  was  so  prosperous  that  in 
spite  of  all  these  funds  being  taken  away,  it  was  able  to  carry 
on  and  pay  its  current  debts. 

The  three  largest  banks  in  New  York  are  the  Chase  National, 
the  National  City  and  the  Guaranty  Trust.  We  have  still  to  hear 
from  the  third  of  these.  Fox  Film  had  used  the  Guaranty  Trust 
as  its  depository  in  Paris  for  all  the  money  it  collected  through- 
out France.  "We  owed  nothing  to  the  Guaranty  Trust — we  had 
never  borrowed  a  dollar  from  them.  And  we  had  had  this 
account  for  many  years.  But  during  this  difficulty  I  was  advised 
by  our  French  agent  that  he  was  sent  for  by  the  manager  in 
Paris  and  told  to  take  the  damned  account  out  of  the  bank;  they 
didn't  want  any  Fox  account  in  the  bank.  We  had  to  comply 
with  the  request.  That  did  us  no  injury,  but  it  indicates  the 
spirit  of  co-operation  between  these  large  banks  in  New  York 
and  these  foreign  banks." 

Also  there  was  Ostrer,  seller  of  the  British  Gaumont  theatres. 
Ostrer  had  got  $14,000,000  in  cash,  and  had  $6,000,000  still  due 
him.  As  soon  as  Ostrer  learned  that  W.  F.  had  broken  with 
Halsey,  Stuart  and  the  Telephone  Company,  he  saw  his  chance: 

"He  would  declare  a  default,  recapture  the  two  and  one-half 
million  shares  we  had  purchased,  have  his  shares  back,  keep  the 
$14,000,000  already  paid  to  him,  and  most  likely  sell  these  shares 
at  public  auction  for  the  best  price  he  could  get.  I  don't  know 
how  much  he  could  have  gotten  for  them  at  that  time.  Perhaps 
there  would  be  no  other  bidder  but  himself.  If  he  was  success- 
ful in  having  no  competition,  he  could  probably  have  gotten  the 
shares  for  $1,000,000.  Here  he  could  have  his  shares  back, 


204     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

$14,000,000  we  had  already  paid,  and  a  deficiency  judgment 
against  these  companies  for  $6,000,000  more — of  course,  it  was 
good  business  on  his  part." 

In  the  midst  of  these  harassments,  with  bankruptcy  and 
destruction  hanging  over  his  head,  W.  F.  remembered  that  it  was 
the  31st  of  December.  He  had  not  been  home  since  the  15th, 
that  Sunday  when  he  got  up  out  of  his  sick  bed  to  attend  the 
conference  at  the  Ambassador  HoteL  But  now  came  this  triple 
date,  his  birthday,  his  wedding  anniversary,  and  New  Year's  Eve, 
and  he  put  everything  behind  him  and  went  home.  His  wife  had 
been  gravely  ill,  and  he  was  trying  his  best  to  keep  his  troubles 
from  her.  Over  the  'phone  he  did  not  dare  discuss  his  affairs, 
because  he  was  certain  that  every  word  was  listened  to  and 
recorded.  In  talking  to  his  wife  he  says  that  he  "lied  like  hell/' 
He  told  her  that  his  affairs  were  getting  better  every  day;  but 
this  valiant  lying  did  no  good,  because  she  got  the  truth  from  her 
brothers,  Jack  and  Joseph  Leo. 

She  had  got  out  of  her  sick  bed  on  the  night  that  Hartfield 
had  come  to  her  home  and  so  gently  and  tactfully  told  her  that 
when  the  general  of  an  army  has  lost  a  battle,  he  must  expect  to 
be  deposed.  After  that  her  illness  became  worse ;  and  now  on  the 
night  of  this  triple  anniversary  her  husband  came  home,  ill  him- 
self and  dazed  with  exhaustion.  This  was  the  occasion  about 
which  W.  F.  tried  to  tell  me,  but  broke  down  and  could  not. 
"Here  was  this  poor  soul  suffering  the  tortures  and  agonies  of 
hell;  and  unfortunately  for  me  I  misconstrued  her  attitude.  I 
had  almost  felt  that  this  episode  in  my  life  was  going  to  estrange 
me  from  the  thing  that  I  had  loved  most." 

Apparently  he  suggested  something  to  the  effect  that  she  too 
was  going  to  turn  against  him.  Anyhow,  it  was  something  he 
could  not  bear  to  remember  or  to  talk  about.  The  outcome  was 
this:  "Mrs*  Fox  said  she  could  be  just  as  ill  in  New  York,  and 
she  would  no  longer  be  separated  from  me  and  left  out  of  my 
troubles." 

In  spite  of  all  suffering,  Eve  Leo  came  to  New  York,  and 
thereafter  her  place,  while  her  husband  was  in  conference,  was 
standing  behind  the  door  of  the  room  listening.  No  telephone 
message  came  without  her  being  on  an  extension  'phone;  if  the 
telephone  company  could  listen  in,  so  could  a  wifei  She  no 


BANK  SOLIDARITY          .  205 

longer  trusted  her  husband  or  her  brothers  to  tell  her  bad  news ; 
she  got  it  for  herself.  She  would  judge  the  persons  with  whom 
her  husband  was  dealing,  and  after  they  had  left  she  would 
express  her  opinion  of  them;  many  times  it  turned  out  that  her 
opinion  was  better  than  her  husband's.  He  says: 

"At  one  time  my  wife's  doctor  advised  her  that  it  was  neces- 
sary to  undergo  an  operation.  She  would  be  confined  to  her  bed 
for  only  three  or  four  days,  but  she  had  to  have  it  done.  Before 
going  to  the  hospital,  she  made  me  promise  that  Otterson  and 
Stuart  would  not  be  trustees  of  my  shares,  I  gave  her  my  sacred 
word  that  I  would  do  nothing  about  it  without  first  going  to  the 
hospital  and  talking  it  over  with  her.  Everything  was  prepared 
for  the  operation.  She  went  there  the  night  before.  In  the 
morning  she  was  being  wheeled  out  of  her  room  to  the  operating 
room,  and  in  the  hallway  some  friend  or  relation  told  her  that 
he  had  just  heard  that  I  was  settling  my  affairs  by  allowing 
Otterson  and  Stuart  to  revive  the  trust  agreement.  That  ended 
that.  She  insisted  upon  being  wheeled  back  into  her  room — no 
operation  was  going  to  take  place.  She  dressed,  ordered  her  car, 
and  came  back  home.  She  said:  'Here  I  have  just  turned  my 
back  for  one  night  and  you  have  already  weakened/  I  tried  to 
assure  her  that  it  was  not  true,  but  she  knew  it  was  tr^e,  or  this 
party  would  not  have  told  her  so.  I  told  her  to  go  back  and  have 
the  operation  done,  but  she  didn't  care  about  an  operation,  death, 
or  anything — here  I  was  doing  the  very  thing  I  had  agreed  not 
to  dol" 

One  of  the  ways  in  which  W.  F.  has  spent  his  leisure  time 
and  money  has  been  the  making  of  an  art  collection.  He  has 
many  treasures  in  his  Park  Avenue  home,  and  thinks  he  has  one 
of  the  best  collections  of  paintings  ever  seen  in  one  room.  He 
and  his  wife  began  this  collection  about  the  third  week  after  their 
marriage,  which  was  when  they  were  living  in  the  railroad  apart- 
ment in  the  Myrtle  Avenue  tenement  in  Brooklyn,  at  a  rental  of 
$11  a  month. 

"I  had  passed  a  store  where  an  auction  was  being  held,  and 
a  dirty-looking  picture  was  being  sold.  It  was  up  to  80  cents 
when  I  joined  the  bidding;  it  was  finally  sold  to  me  for  $L 
With  great  pride  I  presented  it  to  my  wife  and  it  has  always 
occupied  a  place  of  honor  at  my  home.  It  was  the  first  piece  of 


206     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

art  that  I  was  interested  in,  and  from  then  on  until  this  very  day 
we  have  from  time  to  time  bought  treasures  and  added  to  our 
collection.  For  some  individual  pieces  of  art  I  have  paid  up  to 
$100,000.  The  $1  picture  was' a  horse  in  a  stable  with  a  cat  stand- 
ing on  its  back  and  some  chickens  and  dogs  and  other  animals 
around  it. 

"At  one  time  a  friend  came  to  the  house  and  he  frankly 
expressed  himself,  that  this  battle  would  be  my  ruination,  and 
then  pointing  to  all  my  art  treasures,  he  said :  *Now  you  know  you 
can't  go  on  like  this.  All  these  things  are  going  to  end  in  the 
public  auction-room ;  you  know  they  are  going  to  strip  this  home.' 
Mrs.  Fox  was  again  standing  behind  the  curtain.  When  this 
address  was  being  made,  she  appeared  and  went  into  a  frenzy, 
saying  she  didn't  want  a  piece  of  it,  it  could  all  be  sold.  She  was 
willing  to  go  back  to  an  $11  apartment  again.  She  knew  $11  a 
month  now  could  only  rent  a  hall  bedroom,  but  just  as  long  as 
I  had  not  committed  an  act  that  was  dishonorable,  she  was  willing 
to  go  on  with  me.  The  only  thing  she  wanted  to  take  along  with 
her,  she  said,  was  the  little  picture  I  had  bought  her  three  weeks 
after  we  were  married." 

It  was  a  time  of  intense  and  devastating  emotions.  W.  F. 
w^s  holding  on  like  grim  death  to  his  voting  shares  and  his  con- 
trol of  the  companies.  It  was  not  merely  the  treasure  involved — 
it  was  his  name,  his  reputation,  the  faith  he  wished  to  keep  with 
his  stockholders.  That  these  things  really  were  involved  was 
made  plain  by  the  outcome;  the  fact  that  the  enemies  of  William 
Fox,  when  they  got  his  companies  away  from  him,  proceeded  to 
loot  them  and  deprive  the  stockholders  of  everything. 


REEL  EIGHTEEN 
FORD  JOKES 

OUR  Fox  was  conferring  every  day  with  his  lawyers,  Hart- 
field,  Sheara,  and  Reass,  as  to  the  means  of  staving  off 
bankruptcy  and  receivership.  Hartfield  was  still  urging  his  client 
to  go  back  to  the  trust  agreement  with  Stuart  and  Otterson. 
Even  though  he  had  so  plainly  revealed  the  ruin  that  was  planned, 
he  kept  on  urging  this  course,  insisting  that  the  agreement  could 
be  modified  so  as  to  protect  W.  R  Hartfield  was  trying  to  win 
Shearn  over  to  this  way  of  thinking,  and  there  was  a  conference 
at  lunch  at  W.  F.'s  home,  attended  by  Hartfield,  Shearn,  Reass, 
and  Rubenstein.  Says  W.  F.: 

"With  all  the  power  I  possessed,  I  tried  to  make  my  case 
clear  to  Shearn  and  keep  him  from  thinking  in  Hartfield's  direc- 
tion. I  would  get  Shearn  to  think  my  way,  and  then  I  would 
leave  the  room  and  lie  down,  and  by  the  time  I  came  back  I 
would  find  Shearn  thinking  in  the  direction  of  Hartfield,  I  would 
again  open  the  subject,  and  bring  Shearn  back  to  my  way  of 
thinking,  and  then  go  in  and  lie  down  again.  I  would  come  back 
an  hour  later  and  there  was  Shearn  almost  in  accord  with  Hart- 
field.  This  continued  until  about  5  o'clock.  I  then  turned  upon 
Hartfield  and  called  him  all  the  vile  names  that  it  was  humanly 
possible  to  call  another  man,  and  concluded  by  saying:  'Why  the 
hell  aren't  you  man  enough  to  step  out  of  this  case?  Why  don't 
you  resign?  I  ought  to  blow  your  brains  out.' 

"After  this  tirade,  which  lasted  for  a  half  hour  or  more,  and 
which  Hartfield  tried  to  smooth  over,  he  said  he  would  take  it 
up  with  his  firm,  to  see  if  they  would  let  him  resign.  Of  course, 
he  was  thinking  of  the  million  dollars  I  had  promised  his  firm 
if  they  could  salvage  the  companies.  If  we  fired  him,  we  might 
be  liable  for  a  suit ;  so  it  seemed  to  me  it  was  better  to  have  torn 
resign.  I  said  everything  I  could  to  make  him  do  so.  This,  of 
is  207 


208     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

course,  was  in  the  presence  of  Shearn,  who  was  horrified  by  it 
all.  This  meeting  finally  broke  up,  and  Shearn  and  Hartfield  got 
into  their  automobile  and  rode  down  town  together. 

"Shortly  thereafter  Ben  Reass  said :  'I  have  just  had  a  terrible 
experience  today.  Shearn,  who  claims  he  'phoned  me  today  and 
that  I  was  not  available,  reached  the  conclusion  that  we  were 
working  on  matters  without  taking  him  into  our  confidence,  and 
under  those  circumstances  wishes  to  withdraw  from  the  case/ 
Here  was  a  man  who  thought  -he  could  forget  the  death  of  his  wife 
in  our  work  better  than  by  a  trip  around  the  world !  Ten  days 
later,  having  heard  the  arguments  of  Hartfield,  who  didn't  even 
try  to  defend  himself,  Shearn  stepped  out  of  the  case.  That  was 
a  pretext  he  gave — that  we  were  not  conferring  with  him  in  all 
matters.  Of  course,  there  is  no  doubt  in  the  world  that  he  and 
Hartfield  had  got  together." 

And  so  once  more  W.  F,  was  without  a  lawyer,  save  for  his 
family  friend  Reass.  Judge  Shearn  had  seen  what  an  ugly  fight 
it  was  going  to  be ;  he  had  seen  how  many  powerful  interests  he 
would  have  to  antagonize,  and  he  discreetly  and  quietly  stepped 
out. 

W.  F.  refused  to  have  any  further  communication  with 
Hartfield,  and  I  asked  whether  Hartfield  ever  brought  a  suit  for 
his  money.  The  answer  was  that  he  didn't  have  to  sue ;  he  was 
paid  out  of  the  funds  of  the  companies.  All  the  lawyers  were 
paid  out  of  the  funds  of  the  companies;  not  merely  Hartfield, 
Hughes  and  Dwight,  but  all  those  various  firms  which  were  soon 
bringing  actions  for  receivership,  the  Berenson  brothers,  and 
Kresel — and  we  shall  find  the  Fox  companies  paying  them  for 
their  success  in  ruining  the  Fox  companies ! 

The  story  that  W.  F.  had  withdrawn  from  the  voting  trust 
agreement  was,  of  course,  no  secret.  The  newspapers  made  much 
of  it,  and  the  talk  of  receivership  and  bankruptcy  for  the  Fox 
companies.  One  of  the  consequences  was  a  visit  from  W.  F.'s 
friend,  CoL  Claudius  C  Huston.  Huston  came  up  from  Wash- 
ington to  express  to  W.  F.  the  regrets  of  Herbert  Hoover  at 
the  difficulties  in  which  W.  F.  was  involved.  Huston  wanted 
to  be  of  help  if  he  could,  and  said  he  would  be  willing  to  live 
in  New  York  for  a  week,  a  month  or  longer  if  necessary,  to 
be  at  his  side  and  act  as  his  advisor.  Here  is  a  significant  story: 


FORD  JOKES  209 

"I  told  him  it  was  not  advice  I  needed ;  there  was  a  conspiracy 
to  drive  me  out  of  my  business,  and  one  of  the  conspirators 
was  Albert  EL  Wiggin  of  the  Chase  Bank.  All  that  Huston  had 
to  do,  representing  the  White  House,  was  to  go  to  Wiggin  and 
say,  'Stop.  The  administration  resents  this/  On  Christmas 
day  he  actually  went  to  Wiggin's  home  in  the  country  to  take 
Christmas  dinner  with  him,  and  there  expressed  to  Wiggin  the 
dissatisfaction  of  the  administration  at  the  attitude  of  the  Chase 
Bank.  A  day  or  two  later  Huston  told  me  that  Wiggin  had 
sent  word  to  him  that  he,  Wiggin,  resented  the  White  House 
interfering  in  the  business  of  his  bank,  and  that  Huston  had 
better  go  home  and  mind  his  own  business/' 

It  was  here  again  that  W.  F.  and  his  historian  join  issue 
over  the  problem  of  Herbert  Hoover.  W.  F.  thinks  that  this 
was  a  great  proof  of  friendship  on  Hoover's 'part,  while  I  think 
it  was  one  more  proof  of  Hoover's  indecision  and  ineffectiveness. 
What  more  could  Hoover  have  done,  W.  F.  asks,  humbly.  I 
answer  that  here  was  supposed  to  be  a  conspiracy  to  deprive 
an  American  citizen  of  his  property,  and  it  would  have  been  a 
simple  matter  for  the  President  of  the  United  States  to  instruct 
his  Attorney-General  to  consider  the  bringing  of  criminal  pro- 
ceedings against  the  conspirators.  The  merest  hint  of  such  a 
course  from  the  White  House  would  have  brought  the  con- 
spirators to  their  knees,  and  the  money  to  save  the  Fox  companies 
would  have  been  forthcoming  from  the  New  York  bankers, 
W.  F.  kept  tirging  his  high-priced  lawyers  to  consider  taking 
action  tinder  the  criminal  law,  but  in  this  he  was  not  successful. 
These  Wall  Street  lawyers  will  tell  you  that  they  don't  practice 
criminal  law;  the  reason  being  quite  obvious.  So  many  of  the 
things  they  do  are  criminal,  that  there  has  to  be  a  gentlemen's 
agreement  among  them  that  the  criminal  law  does  not  exist. 

Herbert  Hoover  had  a  great  deal  at  stake  in  this  case.  A 
receivership  for  the  Fox  companies,  with  assets  running  into  hun- 
dreds of  millions,  would  certainly  have  smashed  that  little  sprout 
of  prosperity  which  the  administration  was  trying  so  hard  to 
nourish  -into  life.  At  this  time  receiverships  for  industrial  cor- 
porations were  extremely  rare.  Says  W.  F.:  "During  1929, 
after  five  y^ars  of  prosperity  for  all  corporations,  the  word 
receivership  had  almost  been  forgotten.  It  was  easy  to  see  that 


210     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

if,  in  the  middle  of  December,  a  brief  six  weeks  after  the  financial 
earthquake,  we  were  to  go  into  the  receivership  period,  particu- 
larly with  a  company  of  this  size— you  see  what  horror  it  would 
have  caused.  The  only  time  a  receivership  had  occurred  in  the 
last  generation  where  $91,000,000  WOrth  of  liabilities  was  involved 
was  in  a  railroad  receivership;  so  this  would  have  been  tfie  largest 
industrial  failure  in  the  history  of  American  affairs." 

So  here  was  Huston,  treasurer  of  the  Republican  National 
Committee,  most  anxious  to  help  his  friend  W.  F..  in  any  way 
that  would  not  offend  Wiggin  or  Morgan,  and  the  other  great 
bankers  from  whom  Huston  had  the  job  of  collecting  campaign 
funds.  "He  thought  the  first  thing  to  do  was  to  try  to  adjust 
these  difficulties  amicably.  He  suggested  that  perhaps  a  modifi- 
cation could  be  made  in  the  voting  trust  Would  I  be  willing 
to  make  a  modification?  He  said  that,  in  view  of  nay  former 
experiences  with  these  people,  I  ought  to  be  able  to  protect  my 
interests.  Huston  felt  the  first  gesture  for  the  adjusting  of  this 
matter  should  come  from  me.  He  ought  to  be  able  to  report, 
when  he  returned  to  Washington,  that  he  had  made  an  honest 
endeavor,  and  that  Fox  was  willing  to  go  along/' 

So  on  December  22,  W.  F.  prepared  a  memorandum,  of  which 
I  have  a  copy.  The  essence  of  it  is :  "that  no  new  plan  of  con- 
solidation or  financing  can  be  adopted  that  contemplates  the 
dissolution  of  the  present  outstanding  voting  shares  without  the 
consent  of  William  Fox.  ...  I  will  not  permit  the  powers  that 
I  have  as  president  to  be  modified  in  any  other,  respect,  except 
that  I  am  willing  that  there  should  be  a  finance  committee  cre- 
ated, and  this  finance  committee  can  have  full  power  to  attend 
to  the  financing  of  the  company.*' 

Of  course,  Stuart,  Otterson,  and  Wiggin  would  not  accept 
any  such  arrangement:  one  that  would  save  the  Fox  and  leave 
him  in  control.  Colonel  Huston  traveled  back  and  forth ;  he  stayed 
with  W.  F.  morning,  noon  and  night,  and  tried  in  every  way  to 
adjust  the  situation.  He  even  went  so  far  as  to  appeal  for  help 
to  his  personal  friends.  He  knew  a  man  who  had  just  received 
$30,000,000  in  cash,  and  that  would  have  been  very  useful;  but 
he  could  not  succeed  in  interesting  this  friend. 

Then  one  day  W.  F.  made  a  curious  suggestion:  why  not 
appeal  to  Henry  Ford?  Some  eight  or  nine  years  back  Henry 


FORD  JOKES  21 1 

Ford  had  had  the  fangs  of  the  bankers  in  his  leg,  and  he  knew 
how  it  felt.  Could  Huston  get  to  Ford  ?  Could  he  say  that  he 
had  come  at  the  suggestion  of  Hoover,  or  with  Hoover's  approval? 
For  it  was  not  Hoover  alone  who  was  interested  in  the  return 
of  prosperity.  Ford  had  just  as  big  a  stake  involved.  Ford 
wanted  to  stem  the  tide  of  destruction  and  bring  business  back. 

"Finally  we  agreed  that  we  would  send  to  Ford  and  lay 
before  him  a  picture  in  the  following  continuity :  first,  convince 
him  beyond  the  shadow  of  a  doubt  that  the  supplying  of  money 
to  these  enterprises  was  good  business,  convince  him  that  this 
was  not  to  be  a  charitable  venture,  or  one  in  which  he  would  take 
any  risk,  convince  him  that  more  than  ample  securities  could 
be  given  him  for  every  dollar  he  was  asked  to  put  into  the  enter- 
prise; second,  explain  to  him  the  avariciousness  of  this  banking 
group  and  of  the  Telephone  Company,  trying  to  parallel  this 
story  to  the  difficulty  he  had  been  in ;  third,  convey  to  him  the 
importance  of  saving  this  company,  the  fact  that  this  was  to  be 
the  largest  receivership  in  the  history  of  American  industry ;  and 
when  these  three  things  were  fully  presented  to  him,  if  he  showed 
the  slightest  sign  of  interest,  then  and  only  then  could  we  say  to 
him :  "The  President  of  the  United  States  is  vitally  interested  in 
this  thing,  and  if  you  will  call  him  on  the  'phone,  he  will  tell 
you  that  the  administration  would  consider  it  a  service,  if  you 
will  help  in  this  emergency/5' 

They  found  an  emissary,  David  A.  Brown,  a  Jewish  banker 
and  philanthropist,  whose  brother  was  Ford's  architect.  This 
emissary  went  to  Detroit,  and  came  back  and  reported  that  "the 
old  man  was  kind  of  foxy" ;  he  didn't  really  believe  that  the 
emissary  had  authority  to  speak  for  the  White  House.  So  another 
mission  was  sent,  this  time  Huston,  Brown,  and  a  professor  of 
accounting  at  the  New  York  University  who  was  familiar  with 
the  affairs  of  the  Fox  companies. 

"A  talk  was  had  with  Henry  Ford.  He  appeared  to  be  vitally 
interested  in  the  matter;  he  said  he  would  go  over  the  figures, 
and  if  the  transaction  justified  itself,  he  would  be  glad  to  give  it 
careful  consideration.  He  was  then  urged  to  please  call  the 
White  House,  which  he  said  he  would  do  as  soon  as  he  had 
examined  the  figures.  We  waited  for  a  day  and  a  week.  We 
no  longer  could  get  in  touch  with  Ford,  we  could  only  find  his 


212     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

secretary  after  that ;  and  at  the  end  of  a  day  and  week  there 
appeared  in  New  York  a  gentleman  who  said  he  was  Ford's 
confidential  man,  and  wanted  to  get  my  story  first  hand.  I  gave 
it  to  him,  and  I  thought  I  was  able  to  recite  it  very  well  at  that 
time.  After  listening  to  me  carefully,  he  finally  suggested  that 
he  and  Ford  were  on  very  friendly  terms  with  the  Telephone 
Company,  and  that  if  I  wished,  he  would  be  glad  to  take  the 
matter  up  with  Gifford.  Here  he  was,  the  confidential  man  of 
a  chap  who  had  had  an  experience  almost  as  bad  as  mine — and 
now  he  was  going  to  occupy  the  position  of  a  steerer!  I  was  to 
be  steered  back  to  the  Telephone  Company.  It  reminded  me  of 
the  saying:  'All  roads  lead  to  Rome/  I  informed  him  that  I 
needed  no  introduction;  I  had  had  the  pleasure  of  meeting 
Gifford;  and  so  the  conference  terminated. 

"We  then  could  understand  why  Ford  had  never  "phoned  to 
the  White  House.  If  he  had,  and  the  request  had  been^made 
for  him  to  do  this  thing,  he  would  have  been  in  the  position  of 
having  disregarded  a  request  made  of  him  by  the  White  House* 
If  he  didn't  'phone,  he  was  disregarding  no  one  but  myself.  Of 
course,  I  only  had  this  man's  word  that  Ford  and  the  Telephone 
Company  were  very  friendly.  I  don't  know  whether  his  reason 
for  declining  was  a  personal  acquaintance  with  Gifford,  or  stock 
ownership,  or  because  he  reached  a  conclusion  that  he  might  be 
playing  with  fire  if  he  was  going  to  displease  the  Telephone 
Company.  He  must  have  to  have  a  clear  picture  in  his  mind  of 
what  the  penalties  might  be.  I  don't  believe  it  would  do  for 
Ford  to  have  someone  listen  in  on  all  his  telephone  conversations. 
He  reached  the  conclusion,  and  perhaps  wisely  so,  that  this 
Qctofms  was  too  large  for  him/' 

I  asked  W.  F.  what  had  been  his  previous  experiences  with 
Ford;  for  I  had  noted  my  subject's  peculiar  way  of  forgetting 
the  enemies  he  has  made,  and  how  he  has  made  them.  I  suc- 
ceeded m  dredging  out  of  his  memory  three  Henry  Ford  stories. 
Two  of  them  have  nothing  to  do  with  this  book,  but  may  serve 
some  future  historian  with  a  taste  for  oddities.  The  third  I  think 
explains  completely  why  W.  F.  didn't  get  the  help  he  sought. 

The  first  story  carries  us  bade  to  the  summer  of  1916.  "A 
lady  called  on  me  and  said  she  was  Mrs.  Roslka  Schwimmer,  and 
she  asked  me  the  following  questions;  'How  would  you  like  to 


FORD  JOKES  213 

have  your  name  on  the  front  page  of  every  newspaper  of  the 
world?  How  would  you  like  to  have  your  name  discussed  at 
every  dinner  table  ?  How  would  you  like  to  be  the  most  talked-of 
man  in  the  history  of  the  world?  How  would  you  like  to  sell 
twenty  times  more  pictures  than  you  do  now?'  I  said  there  was 
only  one  of  those  things  I  was  interested  in,  and  that  was  how 
would  I  like  to  sell  twenty  times  as  many  pictures  as  before. 
How  could  I  do  that?  She  said:  1  have  a  plan.  I  have  char- 
tered a  boat  and  I  call  it  my  peace  ship.  In  reality  it  isn't  any 
peace  ship  at  all.  I  would  like  you  to  finance  it.  You  must 
provide  the  food  and  the  crew.  From  the  time  this  ship  starts, 
it  starts  the  four  things  I  have  just  named/ 

"I  asked  if  she  hoped  to  bring  peace.  She  said:  'You  know 
we  can't  do  that.  But  the  mere  fact  that  the  newspapers  will  be 
printing  about  it  and  people  will  be  talking  about  it  will  get 
people  to  thinking  about  it,  and  that  may  result  in  peace/  I 
asked  her  to  leave  the  manuscript  of  her  plan  with  me,  that  I 
would  like  to  think  it  over,  and  for  how  long  would  she  give 
it  to  me  with  an  option?  She  would  give  it  to  me  for  a  week. 
About  three  days  later,  she  came  back  all  excited — what  could  she 
do,  all  her  plans  were  being  upset.  She  said :  'You  kbow  I  have 
given  you  an  option,  and  I  didn't  tell  you  that  before  I  had  a 
conference  with  you  I  went  to  Mr.  Ford  and  asked  him  the  same 
questions-  And  the  strange  thing  about  you  two  men  is  that  he 
also  said  not  to  mind  the  rest,  but  tell  him  how  he  could  sell 
twenty  times  as  many  cars  as  ever  before.  I  got  a  telephone 
call  this  morning  that  he  has  accepted  it,  and  wants  to  dose  the 
deal.  What  shall  I  do?'  I  told  her  I  had  given  the  matter  con- 
sideration and  didn't  want  to  do  it  anyway.  Eventually  that 
was  the  Ford  Teace  Ship/  " 

As  you  know,  the  ship  did  not  succeed  in  stopping  the  war, 
and  America  went  in  to  make  the  world  safe  for  democracy. 
W.  F.  became  chairman -of  the  Allied  Theatrical  Motion  Pic- 
tures Team  for  the  Red  Cross,  and  as  part  of  their  drive  they 
arranged  a  mammoth  concert  at  the  Metropolitan  Opera  House. 
For  the  first  and  last  time  in  history  John  McCormack  and 
Enrico  Caruso  were  going  to  appear  upon  the  same  stage.  A 
remarkable  achievement  in  diplomacy — they  had  sent  someone 
to  Caruso  to  say  that  McCormack  wanted  the  honor  of  appearing 


214     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

upon  the  stage  with  Caruso,  and  they  had  sent  someone  to 
McCormack  to  say  that  Caruso  wanted  the  honor  of  appearing 
upon  the  stage  with  McCormack.  Caruso  fell  at  once,  but 
McCormack  tried  to  bargain ;  he  would  appear  provided  Kreisler 
was  invited.  Kreisler,  an  Austrian,  was  an  enemy  alien,  and 
barred  from  American  platforms.  They  hunted  Kreisler  out, 
living  with  his  wife  in  a  hall  bedroom,  destitute.  He  would  play, 
but  he  hadn't  his  violin;  his  violin  was  pawned,  and  the  pawn- 
shop was  closed  because  it  was  after  11  o'clock  on  Saturday 
night.  They  couldn't  find  the  pawnbroker,  and  so  Kreisler 
couldn't  appear,  and  finally  McCormack  consented  to  appear  with 
just  Caruso. 

It  was  a  grand  occasion;  the  tickets  were  beyond  price. 
United  States  Marshal  McCarty  made  a  bid  for  funds,  by  auc- 
tioning off  a  gold  cup  which  the  Kaiser  had  presented  to  some 
American  citizen  for  winning  a  yacht  race.  It  was  five  feet 
high,  a  marvelous  trophy  made  of  solid  gold.  It  had  been  on 
display  in  one  of  the  large  theatres,  with  four  soldiers  to  watch 
it,  two  by  day  and  two  by  night.  It  had  become  quite  a  feature 
in  New  York  life,  having  been  put  up  at  a  public  gathering  and 
sold  at  a  high  price,  and  then  the  bidder  had  returned  it  and 
let  it  be  sold  again.  Thus  it  had  been  sold  and  given  back  a 
dozen  times  at  various  gatherings.  But  now  it  was  announced 
that  the  cup  would  be  sold  for  the  last  time — the  purchaser 
would  not  be  asked  to  return  it.  Amid  great  excitement,  Marshal 
McCarty  lifted  the  huge  object  to  show  how  heavy  it  was ;  it  was 
too  heavy,  and  slipped  from  his  hands,  hit  the  stage  and  broke  to 
pieces !  It  was  not  gold  at  all,  but  a  fake ! 

The  concert  was  a  kind  of  circus  affair.  Everybody  was  there 
to  make  a  contribution  for  the  relief  of  the  war  sufferers,  and 
to  do  it  in  a  conspicuous  way ;  everybody  was  entering  into  the 
spirit  of  the  occasion,  and  those  in  charge  were  getting  as  much 
money  as  possible,  and  repaying  in  publicity  and  fun.  Says 
W.  R: 

"I  sat  in  the  box  at  the  left  hand  side  of  the  house  with  Mrs. 
Fox  and  my  family.  All  at  once  there  was  a  commotion,  and  Al 
Jolson,  who  acted  as  one  of  the  ushers,  ran  down  the  aisle  and 
interrupted  the  marshal  in  what  be  was  doing.  He  said :  T  have 
a  great  bit  of  news.  Who  do  you  suppose  we  have  in  the  house? 


FORD  JOKES  215 

Mr.  Henry  Ford  and  his  wife  and  son!'  The  operator  threw 
the  light  right  down  on  them.  The  marshal  began  making  his 
address  of  welcome,  praising  this  genius  who  gave  employment 
to  a  million  men  and  brought  comforts  to  all  the  peoples  of  the 
world,  a  benefactor.  The  marshal  said :  'Mr.  Ford,  I  know  you 
have  contributed  liberally  to  the  American  Red  Cross,  that  you 
have  contributed  in  Detroit  where  your  contribution  belongs* 
But  this  is  the  City  o£  New  York,  the  city  that  probably  has 
more  Fords  that  any  other  city  in  the  country.  The  people  of 
New  York  City  are  proud  to  ride  in  a  Ford  car.  The  people  of 
New  York  would  be  glad  if  you  could  see  your  way  clear  to 
make  a  nominal  contribution  to  this  New  York  sum.  Won't 
you  please  name  to  these  wonderful  men  and  women  here,  an 
amount,  be  it  ever  so  small,  just  so  that  we  can  record  your 
name  on  our  books?' 

"By  this  time  every  eye  was  turned  on  Ford.  He  had  risen 
from  his  seat,  in  spite  of  his  wife  and  son  both  trying  to  keep 
him  in  his  seat;  he  pulled  loose  and  strode  out  of  the  theatre. 
I  quickly  left  my  box,  and  went  outside,  where  I  found  him 
telling  his  troubles  to  a  couple  of  chauffeurs  and  a  policeman. 
He  said  that  he  had  bought  his  ticket  and  had  a  right  to  sit  in 
peace/' 

And  now  for  the  third  story,  which  I  think  explains  so 
completely  the  attitude  of  Henry  Ford  to  William  Fox : 

"Ford  started  a  weekly  paper,  the  Dearborn  'Independent/ 
bought  and  read  mainly  by  people  who  were  unfriendly  to  the 
Jews.  It  greatly  aroused  the  Jews  of  New  York.  Indignation 
meetings  were  held,  and  consultations  were  had  as  to  how  to  stop 
the  attacks.  I  met  with  Louis  Marshall  one  day  and  said  to  him 
that  all  our  methods  were  wrong.  I  told  Marshall  the  peace 
ship  episode,  and  said:  'Now,  just  as  this  Rosika  Schwimmer 
asked  him  how  he  would  like  to  sell  twenty  times  more  cars  than 
he  was  selling  now,  in  exactly  that  way  somebody  walked  into 
Ford's  place  and  said :  "There  are  120,000,000  people  in  America, 
and  only  6,000,000  of  them  are  Jews.  So  the  Jews  comprise  only 
5  per  cent  of  your  customers.  If  you  begin  a  campaign  against 
the  Jews,  you  will  lose  that  5  per  cent  of  customers,  but  you  will 
gain  25  per  cent  from  the  other  people  of  America/'  That  is  why 
Ford  started  these  attacks.' 


216     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"That  is  what  I  said  to  Marshall.  I  gave  no  more  thought  to 
the  matter  until  one  day  a  man  came  to  me  and  said :  'You  are 
going  to  be  in  the  Dearborn  "Independent"  three  issues  from 
now.'  So  it  was  to  be  myself !  The  shoe  was  threatening  to  pinch. 
I  found  a  mutual  friend  of  Ford  and  myself,  and  said,  'You  like 
Ford  very  well  ?'  He  said  yes.  I  said :  'All  right,  there  is  to  be 
an  article  appearing  about  me  in  this  paper.  There  has  been  a 
campaign  conducted  against  my  people — I  resent  it  strongly,  and 
I  have  made  up  my  mind  to  throw  a  little  searchlight  on  Ford, 
and  see  whether  or  not  he  is  without  a  weak  spot  In  the  short 
time  of  my  investigation  I  find  that  there  are  more  accidents 
where  people  are  killed  who  are  riding  in  Ford  cars  than  in  any 
other  car  made.  That  is  probably  because  he  has  more  cars  being 
used.  We  have  hundreds  of  cameras  from  coast  to  coast.  From 
now  on  they  are  to  be  instructed  that  wherever  they  learn  of  an 
accident  in  a  Ford  car,  they  are  promptly  to  go  to  the  scene  of 
action  and  find  out  what  people  were  killed,  how  many  depend- 
ents were  left,  and  so  on.  They  will  then  get  an  expert  to  make 
an  analysis  of  the  car,  and  have  him  swear  as  to  what  had 
snapped  in  this  car,  if  there  were  any  defective  parts,  etc.  We 
•frill  probably  get  a  hundred  of  these  accidents  a  week  from  now 
on,  and  I  am  going  to  take  the  best  ones  to  appear  in  our  news- 
reds,  one  on  Monday,  and  one  on  Thursday  in  all  my  theatres. 
The  first  two  or  three  weeks,  I  don't  believe  the  people  in  our 
theatres  wiD  pay  any  attention  to  it;  but  after  a  few  weeks  I 
just  don't  know  how  many  people  will  want  to  ride  in  Ford  cars. 
It  may  and  it  may  not  hurt  Ford/ 

"This  man  said :  1  suppose  you  want  me  to  tell  this  story  to 
Ford/  It  was  then  about  3  ;30  in  the  afternoon,  He  left  imme- 
diately for  Detroit,  and  returned  saying  he  had  told  the  story  to 
Ford,  and  said:  'While  you  didn't  authorize  me  to  say  it,  I 
made  it  dear  that  that  is  your  plan  unless  he  abandons  this 
attack  in  his  paper.  He  agreed  to  do  this ;  not  only  to  abandon  the 
attack,  but  he  will  let  you  select  an  editor  of  his  paper,  and  he 
will  pay  the  man's  salary.  Your  editor  will  pass  on  every  piece 
of  copy  that  goes  into  that  paper/  I  said  I  didn't  want  to  assume 
that  responsibility.  But  the  attack  was  stopped,  and  that  was 
the  end  of  that  publication. 

"I  thought  that  Ford  and  I  had  settkd  that  difficulty  in  an 


FORD  JOKES  217 

amicable  way.  The  request  to  discontinue  the  attacks  on  the 
Jews  came  from  everywhere — it  came  from  the  President  and  all 
kinds  of  societies  throughout  the  country.  When  Ford  finally 
saw  that  the  sales  of  his  cars  were  going  to  be  attacked,  that  the 
estimate  of  increase  of  sales  supplied  to  him  was  incorrect,  he 
wrote  a  personal  letter  to  every  protestor,  saying  that  he  was 
discontinuing  the  attacks  as  a  special  favor  to  that  protestor." 

So  much  for  Ford  stories ;  and  now  while  we  are  in  the  com- 
pany of  the  great  ones,  let  us  spend  a  short  while  with  two  others. 

Soon  after  the  panic  W.  F.  had  made  an  appeal  to  his  friend, 
Bernard  M.  Baruch,  with  whom  he  had  been  associated  in  a 
business  undertaking.  Baruch  is  a  stock  market  operator  and 
prominent  Democrat  who  became  an  admirer  of  Woodrow  Wil- 
son, and  during  the  war  was  chairman  of  the  War  Industries 
Board.  "Bernie"  Baruch  is  now  a  benevolent-looking  gentleman 
with  snow-white  hair;  very  tall,  slender,  and  stooping  slightly 
to  meet  his  fellow  mortals.  His  judgment  about  an  investment 
proposition  is  respected  by  everyone  in  Wall  Street,  and  when 
W.  F.  found  himself  in  trouble,  he  remembered  the  great  pleasure 
he  had  given  his  friend  by  collecting  the  old  negatives  ffom  tfae 
morgtte  of  Fox  Film  dealing  with  episodes  in  the  life  ®f  Wilson, 
and  putting  them  together  into  a  picture.  He  knew  Barttcfa  was 
dose  to  the  Chase  Bank  and  an  intimate  friend  of  Wiggis — this 
before  W*  F,  had  come  to  realize  that  Wiggin  meant  to  gobble 
him  up. 

Baruch  called  upon  W.  F,  one  evening  at  the  Ambassador 
Hotel,  and  examined  the  figures  revealing  the  growth  of  Fox 
Film  and  Fox  Theatres  and  their  tremendous  earnings,  Barttch 
is  a  mau  who  is  able  to  understand  corporate  figures,  and  he 
expressed  amazement  that  institutions  so  sound  should  be  in 
financial  difficulties.  Says  W.  F. : 

"After  two  or  three  hours  of  examination  of  the  figures  I 
presented,  he  became  wildly  enthusiastic  about  the  whole  enter- 
prise* He  could  readily  see  from  these  figures  that  the  common 
stock  was  selling  on  the  basis  of  one  year's  earnings.  It  was 
customary  at  that  time  for  common  stocks  of  corporations  to  sell 
at  ten  times  their  one  year's  earnings,  and  therefore  he  stated 
that  the  figures  he  had  read  made  this  proposition  {a  pot  of  gold' ; 
that  it  was  customary  for  him  to  find  projects  of  thk  kind  and 


218     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

present  them  to  his  friends,  the  bankers,  and  he  was  so  impressed 
with  the  figures  presented  to  him  that  he  himself  would  make  a 
$10,000,000  investment.  He  said  he  knew  that  if  proper  finances 
were  provided  and  proper  banking  facilities  afforded,  with  the 
force  he  knew  I  possessed,  this  could  be  made  a  most  unusual 
enterprise. 

"He  explained  to  me  that  during  the  entire  panic  he  was  the 
confidential  advisor  of  Albert  Wiggin ;  that  Wiggin  was  his  per- 
sonal friend ;  that  both  Wiggin  of  the  Chase  and  Mitchell  of  the 
National  City  rested  on  his  advice,  and  that  the  matter  which 
confronted  me  was  insignificant,  and  there  would  be  no  difficulty 
in  straightening  it  out  promptly.  Also  he  added  that  there  would 
be  no  trouble  with  the  Telephone  Company,  because  Gifford  was 
his  personal  friend. 

"I  naturally  was  filled  with  hopes.  This  occurred  very  early 
in  this  difficulty,  sometime  between  November  2  and  November 
10.  As  a  result  of  the  most  kind  and  friendly  interest  Baruch 
had  taken  in  the  enterprise,  particularly  his  assertion  that  this 
enterprise  resembled  'a  pot  of  gold/  I  took  the  liberty  of  calling 
at  his  home  on  Fifth  Avenue  several  times.  It  was  on  my  last 
visit  to  his  home  that  he  informed  me  that  he  had  discussed  the 
matter  downtown,  and  that  the  Stuart  brothers  had  requested 
that  they  be  permitted  to  call  on  him.  I  warned  him  against  this 
meeting.  He  said  their  attitude  would  make  no  difference,  but 
he  felt  that  he  ought  to  hear  their  side  of  the  story,  and  their 
appointment  was  on  this  particular  morning — they  would  be 
coming  along  at  any  minute.  We  concluded  our  conferences,  and 
I  left,  and  waited  directly  across  the  street  from  his  home,  and 
within  a  few  minutes  thereafter  saw  the  Stuart  brothers  enter 
Baraclfs  home, 

'What  transpired  at  that  conference  I  don't  know,  but  I 
know  that  from  that  time  on  Baruch  was  no  longer  available  to 
my  telephone  calls;  my  requests  that  he  permit  me  to  see  him 
again  were,  denied.  I  presume  that  from  the  lips  of  Stuart  he 
heard  that  this  difficulty  I  was  in  was  going  to  make  it  possible 
for  the  Telephone  Company  and  the  Chase  Bank  to  capture  my 
business,  I  can  readily  see  that  when  Baruch  had  to  choose 
between  Fox  and  his  friends  Gifford  and  Wiggin,  he  was  no 
longer  on  my  side," 


FORD  JOKES  219 

Very  soon  now  we  shall  see  a  new  banking  group  coming 
forward  to  do  the  Fox  financing.  This  group  will  be  looking  for 
trustees,  and  will  be  so  indiscreet  as  to  suggest  in  court  that 
either  Bernard  M.  Baruch  or  his  son  should  take  the  place  of 
Stuart  or  Otterson  as  a  trustee.  Says  W.  F. : 

"Baruch  was  infuriated  at  the  thought  of  their  using  his 
name  in  any  matter  that  concerned  me.  He  wanted  nothing  to 
do  with  the  enterprise  that  only  a  few  weeks  before  he  con- 
sidered fa  pot  of  gold.'  He  wanted  nothing  to  do  with  the  enter- 
prise that,  only  a  few  weeks  earlier,  he  had  expressed  a  willing- 
ness to  participate  in  to  the  extent  of  $10,000,000  of  his  personal 
fortune.  Whether  or  not  he  did  participate  in  the  financing  that 
resulted  after  my  companies  were  acquired  by  Clarke,  the  Chase 
Bank  and  Chase  Securities,  I  was  never  able  to  learn.  It  is  prob- 
able that  he  had  a  participation  in  the  enterprise;  and  if  so,  he 
lost  his  money." 

The  other  great  person  whom  we  have  the  honor  to  call  upon 
is  Charles  M.  Schwab,  chairman  of  Bethlehem  Steel,  and  grand- 
daddy  and  Santa  Claus  to  all  American  big  business.  My  first 
acquaintance  with  this  benevolent  orator  of  optimism  and  pros- 
perity was  back  in  1906,  when  one  of  his  former  employes  placed 
in  my  hands  a  mass  of  documents  having  to  do  with  the  Carnegie 
Steel  Company,  which  some  time  before  had  been  making  defec- 
tive armor  plate  for  American  battleships.  Charlie  at  this  time 
had  been  one  of  "Andy's  boys,"  the  shop  foreman  or  superin- 
tendent; and  here  were  shop-records  doctored  in  those  same 
shops,  and  proving  that  certain  plates  which  had  been  placed 
in  the  turrets  of  the  battleship  "Oregon"  were  full  of  air  bubbles, 
and  would  have  splintered  like  glass  if  they  ever  had  been  struck 
by  a  shell.  Fortunately  for  Charlie,  the  aim  of  the  Spanish  fleet 
was  bad;  no  less  fortunately  for  Charlie,  all  these  documents 
were  burned  in  the  Helicon  Hall  fire  in  the  spring  of  1907,  and 
can  never  be  produced  at  any  of  the  banquets  of  financiers  and 
executives  where  Charlie  makes  speeches  bubbling  over  with 
patriotism  and  loving-kindness,  telling  them  how  prosperity  is 
just  around  one  more  corner. 

It  happened  that  the  contracts  of  Mayer,  Rubin  and  Thalberg 
with  Metro-Goldwyn-Mayer  came  up  for  renewal.  Schenck  of 
Loew's  desired  to  renew  them,  but  W.  F.  didn't  think  that  the 


220     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

contracts  aught  to  include  20  per  cent  of  the  net  earnings  of  the 
Loew  Company,  because  this  included  not  only  the  earnings  of 
Metro-Goldwyn-Mayer,  which  the  three  gentlemen  were  running, 
but  also  the  net  earnings  of  a  chain  of  200  theatres  which  the 
gentlemen  were  not  running.  Schenck,  in  his  efforts  to  convince 
the  stubborn  and  penurious  Fox,  invited  him  to  pay  a  visit  one 
evening  to  the  home  of  Charlie  Schwab. 

As  a  youth  I  can  remember  very  well  surveying  this  $3,000,000 
French  chateau,  made  all  of  brownstone,  with  innumerable  towers 
and  turrets,  and  securely  protected  against  prowlers  on  River- 
side Drive  by  high  iron  spikes.  Perhaps  Schenck  thought  that 
W.  F.  would  be  overawed  by  this  royal  splendor;  or  perhaps  he 
thought  that  W.  F.  would  fall  in  love  with  the  soft  caressing 
voice  and  loving  smile  of  Charlie.  Anyhow,  Charlie  spent  an 
evening  convincing  W*  F.  that  this  bonus  arrangement  was  not 
unusual ;  all  the  executives  of  Bethlehem  were  getting  it ;  Grace, 
the  president,  was  receiving  a  small  salary  and  a  bonus  on  the 
profits  amounting  to  more  than  $1,000,000  a  year.  This,  of  course, 
was  before  the  stockholders  got  on  to  that  little  scheme,  and 
made  such  a  fuss  that  Charlie  and  his  boys  had  to  back  down. 
W,  F.  makes  the  unloving  suggestion  that  executives  of  corpora- 
tions who  take  a  bonus  on  the  profits  ought  to  pay  the  companies 
a  bonus  in  years  when  there  are  losses.  This  one  sentence  is 
enough  to  explain  to  you  why  W.  F.  was  driven  out  of  Wall 
Street 

Of  course  W.  F.  did  not  find  himself  in  this  palace,  in  con- 
stiltatioti  with  the  benevolent  Charlie,  without  telling  that  seventy- 
year  old  philanthropist  his  troubles  and  asking  for  help.  Charlie 
expressed  sincere  sympathy  and  regret  for  his  difficulties,  and 
made  hioa  a  free  gift  of  the  hope  that  he  might  ultimately  find  a 
way  out  of  them.  W.  F»  adds :  "I  was  amazed  to  learn  recently 
that  Schwab,  at  the  request  of  Pynchon  &  Co.,  and  of  Wiggin 
of  the  Chase  Bank,  of  which  Schwab  is  a  director,  had  invested 
$2,500,006  in  the  enterprise  to  drive  me  out."  Of  course,  Charlie 
lost  this  money,  and  W.  F.  would  be  superhumanly  loving  if  lie 
were  sorry. 


REEL  NINETEEN 

THE  REPTYLE 

AGAIN  our  Fox  was  hunting  for  lawyers.  Through  Huston 
-*A*he  retained  James  Francis  Burke  of  Pittsburgh,  general 
counsel  for  the  Republican  National  Committee,  to  help  him  in  his 
negotiations  with  the  Government.  But  he  must  have  another 
lawyer  in  New  York,  and  he  found  hims.elf  thinking  about  Samuel 
Untermyer.  A  curious  circumstance — Wall  Street  knew  he  was 
going  to  retain  Untermyer  as  soon  as  Reass  began  talking  to 
Untermyer  over  the  telephone.  W.  F.  began  to  try  experiments, 
making  over  the  telephone  statements  which  were  not  true,  and 
then  seeing  them  appear  in  the  gossip-sheets  of  Wall  Street.  He 
interprets  this  as  one  of  the  reasons  why  so  many  of  the  great 
ones,  both  financiers  and  lawyers,  backed  out  of  the  case  when 
they  discovered  the  grim  antagonism  of  Otterson  and  Giffocd. 
Few  indeed  are  the  persons  in  Wall  Street  who  would  be  wiUmg 
to  have  all  their  conversations  "listened  in  on"! 

Samuel  Untermyer  is  an  elderly  Jewish  lawyer,  greatly 
dreaded  by  the  money  power  of  this  country.  The  reason  is  that 
he  is  the  one  independent  man  who  knows  the  game  inside  and 
out.  He  was  the  only  one  who  ever  had  the  nerve  to  put  the 
elder  Pierpont  Morgan  on  the  witness-stand  and  ask  him  real 
questions ;  the  fury  of  the  old  wild  boar  of  Wall  Street  over  this 
experience  is  one  of  the  great  stories  of  American  history,  and 
will  be  told  in  all  school-books  when  we  have  real  historians  in 
America.  Meanwhile,  perhaps  you  can  find  in  your  public  library 
a  copy  of  the  so-called  Pujo  report,  which  is  part  of  the  Con- 
gressional record  for  the  year  1912. 

W.  F.  had  thought  about  the  terrible  Untermyer,  and  had 
been  warned  against  having  anything  to  do  with  him ;  the  chief 
warner  being  Charles  Evans  Hughes.  Says  W.  F. :  "I  distinctly 
recalled  when  I  first  met  Judge  Hughes,  telling  him  that  some 

221 


222     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

people  were  urging  Untermyer  to  be  taken  into  the  case,  and  ask- 
ing if  he  had  any  objection  if  we  asked  Untermyer  to  help  him. 
He  didn't  want  Untermyer.  He  said  Untermyer  was  the  lowest 
type  of  human  that  ever  lived;  he  called  him  a  reptyle/' 

In  his  sore  distress  our  Fox  now  recalled  that  Untermyer  was 
representing  Warner  Brothers  in  a  long  drawn  out  fight  with  the 
Telephone  Company.  What  W.  R  wanted  more  than  anything 
else  in  the  world  was  a  lawyer  who  was  willing  to  fight  the  Tele- 
phone Company !  Then  one  day  Reass  told  him  that  Untermyer 
had  said:  "You  ought  to  bring  that  Fox  case  over  to  my  office." 
Another  day  Untermyer  said:  "Fox  will  never  get  out  of  his 
difficulties  until  he  calls  on  me,  because  I  am  the  only  man  who 
has  no  strings  on  him."  W.  F,  mentioned  the  idea  to  Colonel 
Huston,  and  Huston  said  that  if  Untermyer  came  into  the  case 
he  would  have  to  retire,  because  Untermyer  was  a  prominent 
Democrat,  and  Huston  was  treasurer  of  the  Republican  National 
Committee.  Confidentially,  Huston  added  that  Untermyer  was 
the  one  man  "the  gang  down  town"  was  afraid  of. 

So  now  Fox  traveled  down  to  Atlantic  City,  where  Untermyer  > 
occupied  a  penthouse  on  top  of  a  hotel  in  an  effort  to  help  his 
asthma.  And  now  at  last  he  had  a  man  who  would  stand  by  him 
and  fight  his  fight  through.  I  was  happy  when  he  told  me  this, 
for  I  am  under  a  debt  of  obligation  to  this  hard-hitting  lawyer. 
Thirteen  years  ago,  when  I  was  publishing  "The  Brass  Check," 
and  the  Associated  Press  and  the  paper  trust  had  put  a  boycott 
on  me,  so  that  I  couldn't  find  a  wholesale  paper  dealer  in  the 
United  States  who  dared  to  sell  me  a  scrap  of  paper,  a  friend  in 
Boston  agreed  to  make  a  carload  of  book  paper  if  I  would  put 
down  the  cash  with  the  order;  and  it  was  Samuel  Untermyer 
who  loaned  me  the  $4,600  required  for  that  deal.  Also  Unter- 
myer was  kind  enough  to  read  the  manuscript,  and  tell  me  that  it 
couldn't  possibly  be  published,  because  it  contained  fifty  criminal 
libels  and  not  less  than  a  thousand  civil  suits.  I  published  the 
book,  and  did  not  go  to  jail,  and  nobody  even  threatened  a  civil 
suit.  So  now  I  smile  at  Untermyer,  and  tell  him  that  he  is  a 
better  lawyer  than  prophet. 

At  this  same  period,  early  in  January  of  1930,  our  .Fox  had 
conceived  the  plan  of  going  over  the  heads  of  the  bankers,  and 
dealing  directly  with  his  own  stockholders  and  theatre  owners. 


THE  REPTYLE  223 

He  remembered  how  Henry  Ford  had  saved  himself  from  the 
bankers  in  1921,  by  going  to  the  Ford  dealers,  requiring  them  to 
order  a  certain  number  of  cars  and  pay  for  them  in  advance. 
W.  F.  was  supplying  pictures  to  approximately  8,000  theatres 
in  America  and  as  many  more  throughout  the  rest  of  the  world. 
At  least  half  of  these  theatre  owners  depended  for  their  livelihood 
upon  the  Fox  pictures.  Surely  it  would  be  to  their  interest  to 
save  the  Fox  companies ! 

W.  F.  consulted  Professor  Madden  of  New  York  University, 
who  had  gone  to  interview  Ford  with  Huston  and  David  Brown, 
Madden,  whose  specialty  is  accounting  and  finance,  worked  out 
a  plan  for  a  $35,000,000  bond  issue,  and  the  Fox  accountants 
made  a  complete  survey  of  the  assets  of  the  company.  It  was 
arranged  that  there  were  to  be  $2  worth  of  security  for  every 
dollar  of  the  bond  issue.  If  each  of  the  16,000  exhibitors  were 
to  take  $2,000  worth  of  Fox  bonds,  the  problem  would  be  solved. 
That  was  just  about  the  amount  which  these  exhibitors  were  pay- 
ing to  the  Fox  companies  for  films  in  a  single  year. 

This  was  to  be  a  perfect  bond,  designed  not  by  a  banking 
group,  but  by  a  dean  of  a  university !  This  dean  had  published 
articles  warning  the  bankers  that  the  security  for  the  South 
American  bonds  which  were  being  sold  to  the  public  was  wholly 
insufficient*  He  had  told  W.  F.  of  an  incident:  the  House  of 
Morgan  had  written  him,  resenting  his  attitude  towards  a  Sotith 
American  bond  issue  which  they  were  about  to  put  out ;  and  Mad- 
den had  called  Morgan's  attention  to  the  fact  that  the  country 
in  question  had  already  defaulted  in  one  or  more  bond  issues- 
Here  was  to  be  a  model  bond,  prepared  by  a  model  professor 
of  finance.  It  was  to  be  issued  by  a  newly  formed  company 
called  the  Fox  Securities  Corporation.  This,  of  course,  was  a 
terrible  thing  for  the  "gang  downtown."  Here  was  this  lawless 
and  disorderly  Fox  proposing  to  raise  capital  without  bankers ! 
He  was  going  to  sell  $35,000,000  worth  of  bonds  without  giving 
the  customary  rake-off  to  an  investment  house!  Just  as  Ford 
had  escaped  from  their  hands,  so  the  Fox  was  going  to  escape  ; 
and  who  would  be  the  next  one? 

The  Fox  Securities  Corporation  was  formed,  and  the  circular 
for  the  bond  issue  was  ready.  "I  had  the  first  group  of  exhib- 
itors, thirty  or  more,  come  from  various  parts  of  the  country  to 

16 


224     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

try  the  plan  out,  to  see  whether  or  not  it  would  be  practical  to 
sell  these  bonds.  While  we  hoped  for  an  average  of  $2,000  per 
theatre,  we  soon  found  our  calculations  were  all  wrong.  There 
were  many  of  those  who  came  amongst  the  first  group  of  thirty 
who  were  prepared  to  buy  substantial  blocks  of  these  bonds. 
This  was  a  bond  of  a  company  they  were  thoroughly  familiar 
with ;  a  company  that  they  wanted  to  keep  in  business. 

"One  man  called  to  see  me,  Pat  Powers,  who  had  beeri  in 
the  motion  picture  business  at  least  twenty-five  years,  and  whom 
I  knew  very  well.  He  wanted  to  know  all  about  the  bond  issue, 
and  he  wanted  to  subscribe  to  $1,000,000  worth  of  these  bonds. 
He  had  read  about  the  difficulty  I  was  in.  There  were  others 
in  the  room  when  Powers  offered  to  take  $1,000,000  worth  of 
these  bonds.  There  was  a  report  made  downtown  that  thirty 
men  were  enthusiastic  about  it,  and  that  instead  of  an  average 
of  $2,000  apiece  we  could  probably  sell  these  men  $1,500,000 
worth.  There  was  a  clear  indication  that  we  could  sell  $130,000,- 
000  worth  of  bonds  if  we  had  enough  collateral  to  collateralize 
that  many  bonds/' 

At  this  time  W.  F.  was  in  communication  with  Giannini,  the 
California  banker,  to  whom  he  had  appealed  for  financing. 
Giannini  had  sent  his  New  York  man,  Elisha  Walker,  president 
of  the  Bancamerica-Blair  Corporation.  The  name  "Elisha"  sug- 
gests a  patriarch  from  either  Palestine  or  New  England,  but,  as 
a  matter  of  fact,  this  Elisha  is  a  graduate  of  Yale  and  of  Massa- 
chusetts Tech,  and  a  thoroughly  modern  "go-getter/*  hard  and 
cold.  I  happen  to  know  about  him  because  a  friend  of  mine,  a 
young  man  here  in  Southern  California  who  was  working  for 
the  Bank  of  America  as  a  salesman,  was  ordered  to  assist  in  a 
manipulation  of  "Transamerica."  Walker  was  supporting  this 
stock,  buying  it,  and  trying  to  persuade  the  public  to  help  him. 
He  came  to  Los  Angeles  and  made  a  speech  to  all  the  bank 
salesmen,  telling  them  what  a  great  bank  it  was  and  what  a 
wonderful  issue.  My  friend  said  to  rne :  "I  won't  trust  that  man 
and  I  won't  trust  his  stock/'  He  went  to  his  superior  in  the 
bank  and  was  told  that  this  was  the  stock  he  was  hired  to  sell, 
and  he  would  either  sell  it  or  resign.  He  resigned ;  and  the  stock 
slid  from  45  to  2%.  Walker  split  with  Giannini,  and  ousted  him, 
and  then  the  stockholders  reversed  the  procedure. 


THE  REPTYLE  225 

Early  in  January  of  1930  Elisha  Walker  came  to  otir  Fox, 
to  discuss  the  proposition  of  doing  the  Fox  financing  for  a  very 
high  fee.  He  came  with  a  son  of  Giannini's,  and  W.  F.  told 
them  his  story,  and  Giannini's  son  was  sympathetic ;  but,  to  quote 
W.  F.'s  words,  "Walker  is  of  a  more  practical  type,"  He  canie 
again  and  again,  "and  each  time  he  would  have  under  his  arm 
all  the  papers  I  had  given  him  to  study.  To  me  it  looked  like 
he  was  not  interested  in  my  proposal,  and  that  he  was  calling 
for  the  purpose  of  discontinuing  the  negotiations.  Else  why  was 
he  carrying  these  papers  around  with  him?  If  he  was  interested 
in  doing  the  financing,  the  papers  belonged  in  his  office.  Every 
time  I  saw  him  with  these  papers,  I  was  sure  he  had  come  to 
call  off  the  deal/' 

Now  came  this  dangerous  and  terrible  proposition,  a  Fox 
Securities  Company  to  do  the  financing  of  the  Fox  companies, 
and  there  must  have  been  some  word  passed  by  the  powers  of 
Wall  Street.  At  all  hazards  the  Fox  bond  issue  must  be  stopped, 
and  legitimate  bankers  must  do  that  financing.  At  any  rate,  they 
must  pretend  that  they  were  going  to  do  the  financing,  ttntil  they 
had  succeeded  in  blocking  the  independent  plan. 

Which  was  it?  W*  F.  wasn't  sure,  and  isn't  sure  today.  To 
realize  the  complications  of  the  mystery,  you  must  note  that 
Elisha  Walker  was  at  that  time  a  director  of  the  Chase  Bank. 
Wall  Street  friends  of  mine  tell  me  that  Blair  and  Company  have 
always  been  known  as  the  "back-door"  of  the  Chase:  that  is  to 
say,  if  the  Chase  turns  you  down,  you  go  to  the  Blairs,  and  they 
take  your  proposition  at  a  higher  price,  and  Chase  lends  the 
money  to  Blair,  and  some  Chase  officials  get  a  "rake-off." 

Elisha  Walker  came  one  day  and  said,  "We  want  to  do  your 
financing/*  Also  Untermyer  reported  that  he  had  taken  the 
proposition  to  the  firm  of  Lehman  Brothers,  and  they  agreed  to 
come  in.  Subsequently  "Bobbie"  Lehman  told  W.  F.  that  before 
the  decision  was  taken,  he  consulted  the  House  of  Morgan,  asking 
for  permission  to  join  in  the  enterprise,  and  received  it.  You  can 
see  what  a  scare  the  Fox  had  thrown  into  them;  also  you  can 
see  who  it  was  that  had  been  blocking  the  Fox  companies  from 
credit ! 

It  was  to  be  a  job  paying  $10,000,000  in  commissions,  and 
there  weren't  many  such  jobs  lying  around  Wall  Street  in 


226     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

January  of  1930.  Nevertheless,  it  was  a  great  favor  the  bankers 
were  doing,  so  they  all  considered.  Once  more  W.  F.  was  sum- 
moned to  a  third  degree,  to  have  his  pockets  searched,  and  if 
possible  picked.  Once  more  the  swarm  of  accountants  and 
lawyers — fifty-eight  accountants  and  twenty-two  lawyers — in- 
vaded the  offices  of  the  Fox  companies,  and  as  W.  F.  says,  "for 
thirty  days  and  thirty  nights  they  made  an  exhaustive  search  of 
every  transaction,  of  every  directors'  resolution,  from  the  very 
inception  of  this  company,  to  discover  one  misdeed  on  the  part 
of  Fox.  These  auditors  and  lawyers  never  went  home  to  sleep. 
They  remained  locked  in  this  building  of  ours,  and  delved  and 
searched  in  the  hopes  of  discovering  one  thing  that  this  man  Fox 
had  done  with  which  he  could  be  charged." 

You  must  get  the  peculiar  position  of  our  Fox  at  this  moment. 
His  securities  plan  is  failing,  but  so  far  he  has  managed  to  keep 
that  fact  from  the  bankers.  The  reason  of  its  failing,  he  declares, 
is  that  the  practical  work  was  dependent  upon  the  Fox  executives, 
those  very  same  gentlemen  who  had  signed  the  "round-robin," 
and  who  were  now  working  in  the  services  of  Otterson  and  Stuart 
and  Harley  Clarke.  Pat  Powers  had  promised  to  buy  $1,000,000 
worth  of  the  bonds ;  but  then  pretty  soon  "W.  R.  Sheehan  learned 
about  Pat  Powers,  and  from  then  on  I  no  longer  had  the 
$1,000,000  subscription." 

The  day  after  the  first  conference  gathered,  W.  F,  asked 
Grainger,  the  American  sales  manager,  if  he  had  got  those  sub- 
scriptions. "There  was  an  excuse  made  as  to  why  each  one 
would  have  to  go  home  and  consult  his  partner,  wife,  father, 
mother,  brothers,  sisters — all  kinds  of  alibis  were  given  me.  It 
appeared  clear  to  me  that  the  sale  of  these  securities  to  my  cus- 
tomer^ was  not  going  to  be  as  easy  as  I  thought  it  would  be. 
Grainger  was  Winfield  R.  Sheehan's  most  intimate  friend,  and 
he  was  to  handle  the  American  exhibitors;  Clayton  Sheehan, 
Winfield's  brother,  was  to  handle  the  foreign  exhibitors.  Con- 
fidentially it  was  reported  to  me  that  neither  Grainger  nor  Clayton 
Sheehan  intended  to  do  anything  that  would  result  in  this  venture 
becoming  successful.  In  fact,  they  were  spreading  secret  propa- 
ganda that  no  one  should  buy  any  of  these  debentures.** 

So  W.  F.  went  ahead  with  the  bankers.  He  insisted  on  tak- 
ing in  Dillon,  Read  &  Co.,  because  they  were  the  bankers  for  the 


THE  REPTYLE  227 

Loew  Company,  whose  friendship  was  needed  for  the  consolida- 
tion or  merger.  Clarence  Dillon  must  be  a  friend  to  the  enter- 
prise if  it  was  to  go  through;  on  the  other  hand,  if  it  was  just 
one  more  bluff,  and  if  it  was  not  going  through,  then  it  was 
obvious  that  the  Fox  was  completely  helpless,  and  would  have 
to  sell  his  voting  shares,  and  in  that  case  Dillon  would  be  in  the 
group  that  would  buy  them.  Dillon,  you  recall,  had  eaten  all  the 
grapes  at  the  luncheon,  and  had  been  very  nervous,  and  had 
warned  W.  F.  that  he  was  going  to  lose  his  voting  shares^  and 
that  someone  who  knew  nothing  about  the  picture  business  was 
going  to  be  put  in  charge  of  the  Fox  companies,  Dillon  was  a 
director  in  the  Chase  Bank,  as  was  Elisha  Walker. 

W.  F.  was  sure  that  the  Halsey,  Stuart  and  Chase  Bank  crowd  ' 
would  know  everything  that  he  was  doing  anyhow,  and  it  was 
better  to  have  them  in  the  picture.  When  I  asked  about  this,  he 
said :  "Never  avoid  your  enemy.  Always  meet  him  face  to  face. 
I  can  fight  him  better  if  I  see  him  every  day,  than  if  I  have  shut 
him  out  where  I  can't  watch  him/* 

The  accountants  had  finished  their  work,  and  the  time  had 
come  for  the  final  picking  of  pockets,  which  took  place  at  the 
home  of  Elisha  Walker.  There  was  a  lawyer  named  Swaine, 
representing  the  Bancamerica-Blair,  and  one  named  Royce  repre- 
senting Lehman  Brothers.  Says  W.  F. :  "As  long  as  I  live  I 
shall  never  forget  the  grueling  that  I  received  at  the  hands  of 
Royce  and  Swaine.  Royce  soon  made  it  evident  that  he  was- 
representing  something  else  besides  the  bankers.  'The  Tri-Ergon 
patents?  Why,  they  belong  to  the  Fox  Film  Corporation/  was 
his  attitude,  and,  *We  insist  upon  you  turning  them  over  to  it/ 
The  Grandeur  Company,  of  which  I  was  a  half  owner,  belonged 
to  the  companies;  he  insisted  that  I  return  it  to  the  company. 
Although  from  my  books  they  could  readily  learn  that  I  had 
invested  $600,000  of  my  own  capital,  that  didn't  make  any  dif- 
ference. Mr,  Walker  was  telling  me  on  the  side  that  of  course 
he  had  no  control  of  these  bankers ;  that  was  their  recommenda- 
tion, and  we  needed  their  names  as  having  approved  the  form 
of  financing.  They  took  the  attitude  that  the  interest  I  had  in 
the  Fox  Movietone  News  belonged  to  the  company /' 

The  answer  of  W.  F.  to  all  this  was  that  if  he  was  going  to 
be  tied  up  with  the  bankers  for  ten  years  or  so,  he  ought  to  have 


228     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

a  salary.  He  hadn't  received  any  for  the  past  four  years,  you 
will  remember.  But  no,  there  wasn't  any  need  for  him  to  get 
a  salary.  What  Elisha  Walker  was  going  to  do  was  to  avoid  any 
written  contract  on  the  subject. 

"Finally  a  compromise  was  made  after  much  discussion — 
after  my  pointing  out  to  them  that  we  were  paying  three  or  four 
or  five  thousand  dollars  a  week  for  performers  who  had  no 
knowledge  of  the  picture  business  when  we  began,  and  that 
Zukor  was  probably  getting  five  or  six  hundred  thousand  dollars 
a  year,  and  that  my  salary  ought  to  be  the  same.  A  salary  of 
$150,000  a  year  was  to  be  paid  to  me;  a  free  license  was  to  be 
given  to  the  companies  of  my  patents  of  Grandeur  and  of  Tri- 
jErgon;  and  I  was  to  return  the  25  per  cent  interest  I  had  in  the 
Movietone  News  department.  That  was  as  far  as  I  would  go; 
they  knew  I  would  go  no  further,  and  they  made  their  contract 
on  the  best  basis  they  could. 

"How  can  I  indicate  more  clearly  to  you  that  when  they  were 
making  this  deal  they  were  representing  Clarke,  than  to  tell  you 
that  later  on,  when  Clarke  bought  me  out,  he  insisted  that  I 
turn  in  my  shares  in  the  Movietone  News,  that  I  give  him  a  free 
license  for  the  Grandeur  Company,  and  that  I  give  a  free  license 
for  the  Tri-Ergon  patents?  In  other  words,  in  January  these 
bankers  and  lawyers  were  extracting  all  that  they  knew  they  could 
get,  so  that  when  Clarke  took  control  he  would  have  no  bargain- 
ing to  do," 

Now  came  the  question  of  the  trustees  who  were  to  control 
the  voting  shares  during  the  period  of  financing.  It  was  arranged 
that  there  were  to  be  three :  one  was  the  president  of  a  bank 
controlled  by  Bancamerica- Blair ;  another  the  president  of  a  bank 
controlled  by  the  Lehmans ;  and  the  third  was  to  be  named  by 
Clarence  Dillon.  Whereupon  Dillon  arose  with  a  new  and  bril- 
liant plan.  These  banking  firms  would  be  very  pleased  to  form 
a  syndicate,  to  sell  $65,000,000  worth  of  Fox  securities  for  a  10 
per  cent  commission ;  but  he  felt  that  the  number  of  trustees  was 
insufficient,  and  that  the  number  should  be  increased  to  five ;  there 
should  be  added  Harold  Leonard  Stuart  of  the  firm  of  Halsey, 
Stuart  &  Co.,  and  John  Edward  Otterson  of  the  Telephone 
Company. 

All  along  W.  R  had  felt  certain  that  the  great  Qarence  Dillon 


THE  REPTYLE  229 

was  representing  these  groups,  and  so  he  was  not  surprised  by 
this  proposition.  Everybody  else  in  the  room  seemed  to  think  it 
was  a  fine  idea,  including  even  W.  F/s  lawyers,  James  Francis 
Burke,  Samuel  Untermyer,  and  Alvin  Untennyer,  his  son. 

"Clarence  Dillon  carefully  explained  to  me  that  no  harm  could 
come  through  my  consenting  to  this  new  arrangement,  because 
after  all  the  Telephone  Company  and  Halsey,  Stuart  were  going 
to  be  in  the  minority.  They  had  only  two  votes  out  of  five.  Of 
course,  the  fact  of  the  matter  was  that  they  would  have  at  least 
three  votes  out  of  five,  for  surely  Clarence  Dillon's  vote  would 
always  belong  to  the  Telephone  Company.  This  conference,  as 
it  appeared  to  me,  was  for  no  other  reason  than  to  again  steer 
me  back  into  the  spider's  web. 

"I  thought  that  with  this  new  formed  banking  group  it  would 
be  better  if  I  did  not  strongly  oppose  this  new  recommendation, 
which  had  been  fully  concurred  in  by  everyone  present.  It  is 
rather  a  strange  feeling  to  sit  in  the  room  with  twenty  presum- 
ably brainy  men,  all  of  them  agreeing  on  a  plan,  and  for  one 
individual  to  say,  'No,  that  doesn't  suit  me/  Such  an  action 
would,  of  course,  clearly  indicate  that  they  were  dealing  with  a 
stubborn  man. 

"I  felt  that  I  could  well  afford  to  risk  agreeing  with  the  plan, 
with  the  reservation  that  it  must.be  consented  to  by  Mrs.  Fox. 
I  felt  reasonably  sure  in  my  own  mind  that  there  wasn't  the 
slightest  chance  of  Mrs.  Fox  agreeing  to  this  proposed  plan,  in 
which  the  Telephone  Company  and  Halsey,  Stuart  were  again  to 
become  the  trustees  of  my  shares.  I  said :  "Gentlemen,  this  is  a 
perfectly  simple  matter.  You  have  a  telephone  here.  Let's  call 
Mrs.  Fox  on  the  'phone. and  ask  her  to  come  here/  'No,'  said 
Clarence  Dillon,  'this  is  a  sort  of  stag  party  and  I  don't  believe 
she  should  be  asked  to  come  here/ 

"Samuel  Untermyer  then  volunteered  that  he  go  to  my  home, 
and  talk  to  Mrs.  Fox  and  explain  to  her  the  necessity  of  con- 
senting to  this  arrangement.  I  suggested  that  it  would  be  bad 
policy  for  Untermyer  to  accompany  me,  for  if  she  objected  to 
the  plan,  and  he  used  his  persuasive  powers  on  her  without  suc- 
cess, it  would  result  in  h^r  losing  confidence  in  him,  and  there- 
fore I  would  suffer  as  a  result  of  it.  I  suggested  that  one  of 
the  bankers  come  along  with  me,  or  one  of  the  lawyers  for  the 


230     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

bankers.  No,  they  would  prefer  not  doing  that.  It  was  then 
suggested  that  James  Francis  Burke,  who  said  he  knew  Mrs,  Fox 
very  well,  that  he  had  met  her  often,  come  along. 

"So  James  Francis  Burke  and  myself  left  the  bankers  and 
lawyers  at  Dillon's  home  and  proceeded  to  my  home.  I  promised 
him  that  when  we  entered  the  house  I  would  do  no  more  than 
say  good  evening  to  Mrs.  Fox,  and  I  would  do  that  within  his 
presence  and  within  his  sight,  and  that  he  would  do  all  the  talk- 
ing, and  I  would  be  perfectly  quiet.  This  plan  was  carried  out 
just  that  way,  Mr.  Burke  began  the  conversation.  He  spent  ten 
or  fifteen  minutes  explaining  the  great  danger  of  William  Fox; 
that  without  a  banking  group  this  meant  total  destruction.  Mrs, 
Fox  became  uneasy  and  said:  'Why,  I  can't  understand  it.  I  can't 
quite  understand  what  you  are  talking  about  Mr.  Fox  has  a 
banking  group  now.  Why,  Mr.  Fox  had  created  the  Fox  Secur- 
ities Corporation,  and  was  prepared  to  sell  $35,000,000  worth 
of  bonds.  He  was  requested  by  this  banking  group  not  to  do 
that,  although  he  was  assured  of  success.  Now,  is  there  any 
doubt  about  this  banking  group  going  forward  with  this  pro- 
posal ?> 

"It  was  then  that  Burke  told  her,  no,  they  just  wanted  a  very 
slight  modification— to  increase  the  trustees  to  five.  Mrs.  Fox 
said:  *WeIl,  there's  no  objection  to  that.  Whom  do  they  propose 
for  the  additional  two?'  She  suggested  that  perhaps  they  were 
kind  enough  to  see  the  justice  of  nominating  me  as  one.  Who 
would  the  fifth  one  be?  'No/  said  Burke,  'the  plan  is  to  give 
these  two  trusteeships  to  Stuart  and  Otterson/ 

"Well,  the  scene  that  followed  that  was  just  as  though  a 
volcano  had  burst  forth.  She  ran  to  the  door  and  locked  it,  ran 
into  her  room  and  put  her  hat  and  coat  on.  When  she  came 
back  again,  nothing  would  do  but  to  take  her  to  Clarence  Dillon's 
home.  She  wanted  to  meet  these  honorable  bankers  cmd  these 
lawyers.  She  was  perfectly  willing  to  see  William  Fox  ruined, 
but^the  Telephone  Company,  so  far  as  she  was  concerned,  never 
again  were  they  to  have  anything  to  say  in  Fox's  business.  That 
was  about  1  a.  m.  We  persuaded  her  to  please  stay  at  home  and 
let  us  go  back. 

"Well,  we  returned  I  said  to  Burke :  T  will  remain  in  the 
lower  hall  while  you  go  up  to  the  conference  room  to  explain 


THE  REPTYLE  231 

this  scene.  I  would  rather  not  be  present.  You  will  probably  be 
able  to  explain  it  more  satisfactorily  with  my  not  being  in  the 
room/ 

"Of  course  Burke  had  spent  considerable  time  explaining  to 
Mrs,  Fox  that  this  meant  ruination  to  me,  and  meant  the  with- 
drawal of  the  banking  group.  But  a  few  minutes  later  Clarence 
Dillon  came  from  the  upper  floor  downstairs  to  where  I  was 
waiting,  and  took  me  into  a  separate  room  and  said :  'Fox,  I  have 
seen  all  kinds  of  deals  here  in  Wall  Street.  I  have  never  seen 
one  just  like  this.  You  and  your  wife  display  more  courage  and 
more  nerve  than  I  have  ever  seen  expressed  before  in  a  Wall 
Street  transaction.  Your  courage  deserves  great  consideration  on 
the  part  of  your  bankers,  and  now  that  we  know  the  true  senti- 
ment that  exists  with  you  and  Mrs.  Fox,  we  will  manage  to  go 
forward  and  just  leave  three  trustees/ 

"In  other  words,  Dillon  had  played  his  last  card  for  the 
Telephone  Company.  Dillon  wanted  to  be  able  to  say  honestly 
and  truthfully  to  Albert  Wiggin  and  to  his  friend  Walter  Gifford 
that  he  had  done  everything  in  his  power  to  put  Halsey,  Stuart 
and  the  Telephone  Company  back  into  the  picture.  But  he  had 
failed." 


REEL  TWENTY 
LEGAL  ACTIONS 

IT  is  impossible  to  know  what  was  going  on  behind  the  scenes 
during  this  crisis.  There  is  no  complete  solidarity  among 
banking  groups ;  they  rebel  against  authority,  fight  one  another, 
and  steal  one  another's  loot.  The  stakes  here  were  huge  ones, 
and  it  looks  as  if  the  Elisha  Walker  and  Lehman  crowd  had 
made  up  their  minds  to  take  the  Fox  away  from  the  Stuart- 
Telephone-Chase  Bank  crowd.  The  latter  crowd,  on  the  other 
hand,  were  determined  to  hold  onto  their  prey,  arid  they  went 
ahead  with  plans  to  tie  up  the  new  financing  arrangements. 

There  began  a  series  of  legal  actions  intended  to  throw  the 
companies  into  receivership.  The  method  pursued  in  such  cases 
is  that  of  suits  by  stockholders.  It  happens  at  rare  intervals  that 
a  stockholder's  suit  is  genuine,  but  ninety-nine  times  out  of  a  hun- 
dred, these  suits  are  arranged  for  by  rival  financial  interests, 
seeking  the  control  of  a  company,  or  the  manipulating  of  its 
stock.  A  lawyer  is  told  to  find  a  stockholder  who  is  willing  to 
let  his  name  be  used,  provided  that  all  the  costs  are  paid. 

The  lawyer  who  brought  the  first  receivership  action  against 
the  Fox  companies  was  named  Berenson,  and  came  from  Boston. 
He  had  appeared  in  the  New  Haven  Railroad  receivership,  repre- 
senting a  few  shares  of  stock,  and  had  finally  worked  himself 
into  a  position  where  he  received  a  fee  of  $1,000,000,  Our  old 
friend  Blumy  had  relatives  in  Boston,  and  knew  Berenson  well ; 
and,  as  we  know,  Blumy  had  become  a  retainer  of  Harley  Clarke 
of  Chicago.  W.  F.  ventures  a  guess  that  Clarke  may  have  asked 
Blumy  to  find  a  lawyer  who  would  start  an  action  against  the  Fox 
companies.  That  Berenson  was  working  in  the  interests  of 
Clarke  is  proved  conclusively  by  the  fact  that  after  Clarke  had 
come  into  full  control  of  the  Fox  companies,  these  companies 
paid  Berenson's  fee,  amounting  to  more  than  $250,000, 

232 


LEGAL  ACTIONS  233 

Berenson  in  his  action  claimed  to  represent  620  shares  of 
stock,  the  value  of  which  on  the  day  of  filing  the  action  was  less 
than  $12,000.  Berenson's  complaint  charged  all  kinds  of  gross 
mismanagement  of  the  companies  against  their  president.  He 
charged  that  W.  F.  had  incurred  a  mass  of  financial  obligations 
which  he  could  not  meet ;  that  he  was  about  to  pay  large  sums 
of  money  to  himself  and  to  the  stockholders  as  dividends  whkh 
the  companies  could  not  afford.  Accordingly  it  was  prayed  that 
the  United  States  district  judge  would  appoint  a  receiver  to  take 
over  the  affairs  of  the  companies  and  protect  the  stockholders, 

This  complaint  was  filed  January  14,  1930,  and  shortly  after- 
ward came  a  complaint  of  Mrs.  Susan  Dryden  Kuser,  Mrs. 
Kuser  is  the  widow  of  that  Newark  friend  who  had  invested 
$200,000  in  Fox  Film  in  1915,  and  had  had  the  money  repaid  to 
him  with  8  per  cent  interest  in  1917,  and  in  the  course  of  fourteen 
years  had  received  about  $10,000,000  in  dividends.  The  bulk  of 
the  fortune  which  Kuser  left  his  widow  had  come  from  the 
Fox  enterprises.  Says  W*  F. : 

"Anthony  Kuser  was  one  of  the  best  friends  I  had,  a  great 
believer  in  me  and  in  the  Fox  enterprises.  Any  time  he  wanted 
$100,000  or  $500,000  or  $1,000,000,  he  simply  sold  some  of  the 
shares  that  he  had  got  for  nothing.  When  this  difficulty  came 
up,  his  widow  had  still  a  substantial  block  of  these  shares.  There 
were  at  least  fifteen  or  more  Kusers  who  are  stockholders  in 
the  Fox  enterprises,  and  who  had  made  this  tremendous  fortune. 
The  Kuser  family  were  united  during  all  of  this  difficulty  behind 
Fox.  The  only  one  of  the  family  who  appeared  dissatisfied  was 
Mrs,  Susan  Kuser,  I  don't  believe  she  was  really  dissatisfied. 
I  believe  someone  had  gone  to  this  widow  and  incited  her  to 
become  adverse  to  my  interests. 

"General  Heppenheimer,  president  of  the  Trust  Company  of 
New  Jersey,  one  of  the  thirteen  banks  from  which  I  had  bor- 
rowed money,  was  the  confidential  advisor  of  Mrs.  Kuser.  I 
presume  that  either  the  Telephone  Company  or  the  Chase  Bank 
at  one  of  the  bank  meetings  asked  Heppenheimer,  didn't  he  know 
a  substantial  holder  of  Fox  Film  stock  who  would  start  an  action. 
He  must  have  said,  'Yes,  I  know  Mrs.  Susan  Kuser/  General 
Heppenheimer  is  the  same  chap  who  called  with  B.  K.  Marcus, 
president  of  the  Bank  of  the  United  States,  as  a  committee  of 


234     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

two  to  inform  me  that  it  was  the  intention  of  the  bankers  to 
apply  for  a  receiver.  To  Marcus'  bank,  Fox  Film  owed  $1,600,- 
000.  It  was  the  largest  bank  creditor.  Marcus*  interest  should 
have  been  to  protect  that  money.  But  he  was  evidently  tinder 
orders  from  Chase  Bank,  and  on  his  shoulders  fell  the  obligation 
of  supplying  the  lawyer  who  would  begin  an  action  for  receiver- 
ship for  a  lady  by  the  name  of  Kuser,  whom  Heppenheimer  must 
have  produced." 

The  lawyer  who  brought  this  suit  for  Mrs.  Kuser  was  Isador 
Kresel,  general  counsel  for  the  Bank  of  the  United  States,  the 
Marcus  bank.  Also  he  was  a  director  in  that  bank.  W.  F.  owed 
$1,600,000  to  this  bank,  and  he  would  have  thought  that  KreseTs 
first  interest  would  be  to  the  bank.  In  bringing  suit  against  the 
Fox  companies  to  ruin  them  and  destroy  their  assets,  he  was 
certainly  not  performing  a  good  service  for  the  bank.  W.  F. 
speculates : 

"Perhaps  he  was  told  by  the  Chase  Bank  and  by  the  Tele- 
phone Company:  *Mn  Kresel,  if  you  take  this  case,  so  far  as 
the  $1,600,000  that  the  Fox  Corporation  owes  your  bank,  you  can 
dismiss  it  from  your  mind.  Under  any  circumstances,  we  will 
pay  that  note/  How  could  a  man  take  a  case  like  this  with  any 
other  understanding?  Of  course,  when  my  stock  was  sold  out 
to  Harley  L.  Clarke,  we  found  a  check  drawn  to  the  order  of 
Isador  Kresel  out  of  the  treasury  of  the  Fox  Theatres  Corpora- 
tion for  the  sum  of  $50,000.  Again  I  wish  to  call  your  attention 
that  Kresel's  bill  first  should  have  been  paid  by  Mrs.  Kuser,  if 
Mrs.  Kuser  had  retained  him;  second,  if  she  had  not,  and  if 
Harley  L.  Clarke  asked  Kresel  to  serve  as  the  attorney  for  Mrs. 
Kuser,  then  the  bill  was  due  from  Harley  L.  Clarke.  If,  on 
some  theory,  Clarke  could  justify  Kresel's  services  being  paid  for 
by  the  very  company  that  he,  Kresel,  was  trying  to  ruin,  then 
the  bill  should  have  been  paid  by  Fox  Film.  But  on  what  kind 
of  reasoning  was  it  possible  to  imagine  paying  KreseTs  bill  out 
of  the  funds  of  the  Fox  Theatres  Corporation,  for  whom  he  had 
never  performed  a  service?  That  is  beyond  my  understanding 
powers." 

In  order  to  complete  the  story  of  Isador  Kresel  I  mention  that 
he  has  since  been  indicted  on  many  counts  in  connection  with 
the  closing  of  the  Bank  of  the  United  States,  and  as  I  write  these 


LEGAL  ACTIONS  235 

words  he  is  on  trial  for  perjury  in  connection  with  this  matter. 
SaysW.  F.: 

"Of  course,  when  I  learned  that  Kresel  had  started  an  action 
for  Mrs.  Kuser,  I  confronted  Marcus,  and  charged  him  with 
having  supplied  his  personal  attorney,  the  general  counsel  for  the 
Bank  of  the  United  States  and  a  director  of  that  bank.  Of 
course  I  found  fault  with  him  for  allowing  Kresel  to  lend  himself 
to  a  dirty  action  of  that  kind.  Marcus  tried  to  get  out  of  it,  but 
I  said:  'If  you  don't  see  this  man  at  your  bank,  he  lives  with 
you  in  the  same  building.  I  take  it  for  granted  you  are  in 
constant  conference.  He  couldn't  have  taken  this  retainer 
without  your  knowledge.  In  fact,  I  believe  you  asked  him  to 
take  it/ 

"I  made  a  rather  strange  prediction  to^  Marcus  sometime  in 
January  or  the  early  part  of  February,  1930.  I  made  this  pre- 
diction to  him  across  a  dinner  table;  there  were  four  of  us 
dining — he,  his  brother-in-law,  a  friend  of  mine  and  myself.  He 
was  constantly  urging  me  to  go  forward  with  the  trust  agree- 
ment, that  was  my  only  salvation.  I  had  listened  to  him  and 
taken  his  advice,  until  the  day  when  he  asked  for  more  collateral 
for  my  personal  loan.  Then  I  felt  free  to  speak  to  him  as 
follows : 

"  'Now,  Bernie,  I  don't  believe  you  think  you  are  fooling  me. 
I  know  definitely  you  are  now  in  the  employ  of  the  Chase  Bask 
and  the  Telephone  Company.     You  are  acting  under  orders. 
They  are  telling  you  what  to  do.    I  would  like  to  make  you  this 
little  prediction.    Some  day  the  Chase  Bank  won't  like  what  you 
do.    Some  day  the  Telephone  Company  won't  like  how  you  did 
this  job.    Whenever  they  reach  that  conclusion,  there  are  going 
ta  be  two  things  happen  to  you.    Only  one  thing  is  happening 
to-  me — my  business  is  being  taken  away.    But  two  things  to  you : 
one,  they  will  take  your  bank  away  and  shut  its  doors,  and  two, 
they  will  indict  you  and  send  you  to  jail  as  sure  as  your  name 
is  Bernie  Marcus/    It  was  less  than  a  year  afterwards  that  they 
closed  his  bank,  indicted  him  and  sent  him  to  jail.    Many  a  time 
while  sitting  on  a  bench  inside  those  prisoa  walls,  he  must  have 
a  vision  of  me,  and  remember  the  words  I  sang  in  his  ears*    The 
Chase  Bank  and  the  Telephone  Company  were  through  with  him, 
and  ended  him  just  as  I  told  him  they  would/' 


236     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

W;  F,  consoles  himself  with  the  idea  that  Mrs.  Kuser  never 
saw  the  charges  which  stand  in  her  affidavit.  He  thinks  that 
Kresel,  attorney  for  his  enemies,  prepared  these  charges,  and  that 
Mrs.  Kuser  just  signed  the  document  put  before  her.  Among 
the  charges  was  that  Mrs*  William  Fox  was  a  grafter;  that  -she 
had  performed  work  in  designing  and  decorating  the  theatres  of 
the  Fox  Corporation,  and  had  received  profit  therefrom.  Soon 
after  these  charges  had  been  filed,  and  when  it  began  to  appear 
that  a  receiver  was  going  to  be  appointed  for  the  Fox  companies, 
W.  F.  received  a  call  from  a  son  of  Mrs.  Kuser,  State  Senator 
J,  Dryden  Ktiser  of  New  Jersey.  Says  W.  F. : 

"He  told  me  that  his  mother  had  made  a  great  error,  that  she 
had  been,  informed  that  this  was  a  suit  that  was  only  begun  for 
the  porpose  of  permitting  the  Telephone  Company  and  Halsey, 
Sttiart  to  do  the  financing;  that  she  now  learned  she  had  been 
tricked;  that  the  facts  were  that  she  became  a  plaintiff  in  an 
action  by  subterfuge,  and  what  could  he  do  to  remedy  that  con- 
dition? The  truth  of  the  matter  was  that  his  mother  hadn't  any 
feelings  against  Fox  and  his  family,  and  his  mother  appreciated 
the  millions  that  Fox  had  made  for  her  and  her  husband/' 

As  a  result  of  this  there  was  placed  before  the  court  an. 
affidavit  of  ten  members  of  the  Kuser  family  declaring  their 
support  of  W.  F. ;  and  when  in  March  there  was  a  meeting  of 
the  stockholders  of  Fox  Film  to  decide  the  future  of  the  com- 
panies, the  stock  of  Mrs.  Kuser  was  voted  for  William  Fox. 

Concerning  the  charge  against  Mrs.  Fox,  W.  F.  adds  as 
follows: 

"The  truth  of  the  matter  was  this :  Mrs.  Fox  had  spent  from 
1915  TOtil  April,  1930,  fifteen  solid  years  of  labor,  day  and  night, 
sometimes  until  the  small  hours  of  the  morning,  giving  the  best 
that  her  brain  had,  for  which  she  had  never  received  a  penny  of 
compensation.  For  example,  when  we  were  building  our  theatre 
in  St.  Louis>  Missouri,  it  was  a  common  occurrence  for  her  to 
commute  from  New  York  to  St.  Louis  all  during  the  hot  sum- 
mer to  carry  on  her  work.  Her  purpose  was  to  eliminate  graft 
by  anyone  to  whom  we  may  have  let  the  contract." 

W.  F,  told  me  how  it  had  come  about  that  Mrs.  Fox  took  up 
this  work.  There  were  two  concerns  which  had  been  doing  the 
work  of  redecorating  Fox  theatres,  and  these  rivals  were  bidding 


LEGAL  ACTIONS  237 

for  a  certain  contract,  and  had  got  into  a  quarrel,  and  W,  F. 
didn't  fancy  the  job  of  deciding  between  them.  As  he  phrased 
it,  it  was  a  question  of  the  Rolls-Royce  style  of  theatre  decoration 
as  opposed  to  the  Hispano-Suiza  style.  Rather  than  make  this 
choice,  he  requested  that  this  theatre  be  decorated  according  to 
the  Eve  Leo  style.  She  did  so  well  and  saved  so  much  money 
that  she  had  a  new  job. 

In  my  long  talk  with  Mrs.  Fox  she  told  me  more  about  these 
activities.  She  told  how  she  had  climbed  the  stairs  of  fac- 
tories and  lofts,  to  see  with  her  own  eyes  the  making  of  furniture 
and  chair  covers  and  decorations.  She  told  of  the  many  problems 
involved  in  choosing  durable  materials ;  chair  covers  have  to  be 
tested  for  the  effects  of  human  grease  and  sweat,  and  for  wear- 
ing qualities  in  relation  to  expense.  Always,  of  course,  there 
were  efforts  being  made  to  cheat  the  companies,  and  the  saving 
of  the  companies'  money  was  one  of  the  life  passions  of  her 
husband. 

She  told  me  how  the  dealers  would  try  to  buy  her  with  petty 
graft.  When  a  new  contract  was  being  considered,  they  would 
take  her  and  show  her  some  beautiful  thing  which  they  had  in 
stock,  and  which  they  thought  would  catch  her  f  ancy — a  piece  of 
tapestry,  a  chair,  or  what  not.  They  would  offer  her  this  as  a 
present,  and  Mrs.  Fox  would  say,  "What  is  the  price  of  this?" 
They  would  answer  $150,  or  whatever  it  might  be,  and  Mrs.  Fox 
would  say,  "All  right.  If  you  can  afford  to  make  me  a  present 
of  that  value,  you  can  afford  to  take  that  amount  from  the  com- 
pany's bill.  Please  do  so." 

I  asked  what  could  have  started  the  rumors  of  graft,  and  W. 
F.  told  the  story  of  the  Altman  Art  Galleries : 

"Some  years  ago,  it  came  to  Mrs.  Fox's  ears  that  it  was  the 
common  practice  of  our  studio  employes  here  in  Los  Angeles 
to  hire  furniture  and  furnishings  to  dress  the  sets  in  which  the 
pictures  were  made,  and  on  one  of  her  visits  she  had  seen  some 
of  the  bills  for  rentals  we  were  paying.  This  is  the  way  it  was: 
a  piece  of  furniture  would  be  brought  in  and  the  owner  would 
value  it  at  say  a  thousand  dollars,  and  the  company  would  pay 
10  per  cent  of  its  value  per  week  for  its  rental.  Sometimes  it 
would  stay  in  the  studio  four  or  five  weeks,  and  the  company 
would  pay  $400  or  $500,  without  putting  a  touch  on  that  piece 


238     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

of  furniture — it  would  be  just  as  good  the  day  the  art  gallery 
got  it  back  as  when  they  loaned  it  to  us. 

"She  said:  'You  are  throwing  temptation  in  the  way  of  the 
employes.  In  the  first  place,  you  are  paying  too  much  for  the 
lease  of  the  furniture,  and  there  are  so  many  places  that  this 
furniture  can  be  leased,  it  occurs  to  me  that  someone  is  receiving 
graft  in  connection  with  the  hiring  of  it.  You  ought  to  try  to 
eliminate  that/  I  asked  her  how.  She  said;  'Commission  me 
to  buy  for  the  company  $100,000  or  $200,000  worth  of  art  objects 
and  furniture.  I  will  spend  a  long  time  gathering  it,  going  to 
every  auction  sale  that  occurs  in  New  York  of  all  the  wealthy 
people,  and  inside  of  six  months  or  a  year,  I  will  have  the  finest 
set  of  art  objects  and  furniture  in  California/  I  authorized  her 
to  do  it,  and  she  spent  close  onto  a  year,  going  to  these  auction 
sales  two  or  three  times  a  week,  acquiring  the  finest  art  objects 
there  were. 

"Well,  after  all  the  purchases  were  made,  I  reached  the  con- 
elusion  that  this  furniture  was  by  far  more  than  we  could  use  at 
our  own  studios.  The  trick  was  then  to  rent  these  things  to  all 
studios.  If  it  were  known  in  California  that  this  belonged  to 
Fox  Film,  no  other  company  would  hire  it.  So  we  created  the 
company  known  as  the  Altman  Art  Galleries.  No  employe  knew 
it  belonged  to  Fox  Film,  but  all  of  the  stock  was  subscribed  for 
and  owned  by  Fox  Film;  it  was  a  wholly  owned  subsidiary. 
We  shipped  the  goods  out  here  to  California  and  engaged 
quarters  on  Sunset  Boulevard.  They  are  still  there.  The  Fox 
Film  Corporation  was  instructed  that  they  should  not  lease  or 
hire  a  single  piece  of  furniture  from  anyone  but  the  Altman  Art 
Galleries. 

"Someone  around  the  studios  immediately  must  have  con- 
ceived the  idea  that  that  was  a  business  belonging  to  Mrs.  Fox. 
She  was  no  more  the  owner  than  you  or  this  stenographer  here ; 
but  one  of  the  charges  of  graft  was  that  that  was  her  business. 
Of  course,  Clarke  and  his  crowd  knew  it  wasn't,  because  Clarke 
and  his  crowd  had  all  the  stool  pigeons  in  the  world  in  our 
employ,  who  went  on  his  side  just  the  minute  I  found  myself  in 
trouble,  and  he  definitely  knew  that  the  Altman  Art  Galleries 
belonged  to  Fox  Film.  Saul  E.  Rogers,  our  general  counsel,  had 
created  that  company,  and  he  was  one  of  Clarke's  henchmen/' 


LEGAL  ACTIONS  239 

After  he  was  out  of  his  companies,  W.  F.  wanted  his  wife  to 
bring  suit  for  slander  against  Mrs.  Kuser.  But  his  lawyer, 
Benjamin  Reass,  informed  him  that  he  was  without  redress, 
either  against  Mrs.  Kuser  or  against  the  newspapers  that  had 
published  the  charges.  Reass  made  a  statement  on  the  subject, 
which  I  quote : 

"This  is  how  a  newspaper  can  destroy  a  man  without  redress. 
A  complaint  is  filed  and  the  allegations  are  always  based  on  infor- 
mation and  belief,  and  under  that  category  you  can  make  every 
accusation  that  comes  to  your  mind.  The  plaintiff  in  such  an 
action  as  well  as  the  attorney  have  complete  exemption  from 
responsibility,  because  once  they  come  into  court  and  file  it,  they 
can't  be  held  chargeable.  In  other  words,  that  is  the  one  place 
in  which  you  can  libel  a  man  without  the  slightest  evidence  or 
proof  and  no  responsibility  on  your  part.  The  newspapers  are 
also  exempt ;  they  simply  report  what  the  complaint  charges,  and 
you  are  left  without  redress  and  without  .a  defense.  These 
allegations  were  all  used  as  the  basis  for  a  newspaper  article,  and 
when  I  saw  this  thing  about  Mrs.  Fox,  and  when  Kresel  said 
that  in  court,  that  was  one  of  the  occasions  I  lost  my  temper* 
I  strutted  across  the  courtroom  and  I  told  him  the  others  had 
adopted  the  usual  methods  of  slandering  Mr.  Fox,  but  that  there 
wasn't  one  that  had  brought  a  woman  into  the  matter  yet.  I 
didn't  exactly  call  him  a  liar,  but  I  used  every  other  phrase  I 
could  think  of  to  give  the  same  idea,  and  I  told  him  I  would 
make  him  apologize  for  it." 

These  two  law  suits  were  the  first  sprouts  of  a  large  crop. 
Altogether  there  were  some  twenty-five  legal  actions  brought  in 
the  matter  of  the  Fox  companies.  They  were  brought  in 
Federal  courts  and  in  State  courts,  and  there  were  charges  and 
counter-charges,  and  pleas  and  counter-pleas,  and  injunctions,  and 
stays  of  execution,  and  arguments  of  counsel  as  to  the  rights  of 
Federal  courts  as  against  State  courts — I  have  many  millions  of 
typewritten  and  printed  words  in  a  full  suitcase  and  two  large 
desk  drawers.  I  doubt  if  any  one  human  being  ever  read  them 
all.  As  I  turn  their  pages^  looking  for  this  or  that,  they  loom  in 
my  mind  as  a  monument  to  the  wastes  and  imbecilities  of  our 
capitalist  society.  All  these  highly  paid  lawyers,  these  hundreds 
of  skilled  stenographers  and  typists,  these  filing  clerks  and  court 

17 


240     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

clerks  and  messengers  and  bailiffs  and  policemen  and  judges — 
all  this  apparatus  of  chicanery  and  red  tape  for  the  purpose  of 
determining  the  ownership  of  two  pieces  of  paper  which,  con- 
trolled a  treasure  chest — and  when  the  issue  was  settled  and  the 
ownership  was  determined,  the  treasure  was  gone,  and  nobody 
but  the  lawyers  and  the  bankers  had  anything! 

The  bankers  of  the  new  group — Bancamerica-Blair,  Lehman, 
and  Dillon,  Read,  were  meeting  with  W.  F.  and  working  otit  a 
new  financing  plan.  (Hereafter  we  shall  refer  to  them,  as  the 
Lehman  group,  and  the  plan  as  the  Lehman  plan;)  Their  ac- 
countants were  making  their  investigation  of  the  Fox  companies, 
and  W.  F.  was  scurrying  around  trying  to  raise  a  little  money, 
and  his  lawyers  were  arguing  in  court  trying  desperately  to  avert 
receivership  action,  which  would  have  ruined  everything.  If  the 
business  of  the  Fox  companies  had  been  confined  to  New  York, 
the  situation  might  not  have  been  so  bad,  because  you  can  some- 
tihaes  get  a  friendly  receiver,  and  save  at  least  a  part  of  your 
propertks.  But  here  was  a  concern  doing  business  all  over  the 
world,  and  there  would  have  had  to  be  a  receiver  in  a  score  of 
countries,  and  W.  F.'s  life  work  would  have  been  turned  over  to 
a  swarm  of  vultures  to  pick  its  bones. 

The  judge  who  had  the  deciding  of  the  question  was  Frank 
J,  Coleman  of  the  Federal  District  Court.  Judge  Coleman  is  a 
Republican  and  a  Catholic,  having  studied  in  his  early  years  to 
be  a  Jesuit.  He  had  a  most  difficult  problem  put  before  him,  and 
heavy  pressure  was  brought  to  bear  to  persuade  him  to  throw  the 
companies  into  bankruptcy.  The  story  of  his  attitude,  and  of 
the  various  hearings  and  arguments,  is  a  fascinating  one,  and  the 
outcome  has  the  qualities  of  a  movie  thriller. 

Let  us  get  the  situation  clearly  in  mind.  The  issue  is  the 
stubborn  refusal  of  William  Fox  to  go  on  with  the  voting  trust 
agreement  with  Stuart  and  Otterson.  He  has  been  supposed  to 
turn  over  to  them  the  resignations  of  his  directors,  and  he  refuses 
to  do  it,  and  the  receivership  threat  is  held  over  his  head  as  a 
club  to  frighten  him.  Halsey,  Stuart  &  Co.  are  demanding  tfee 
receivership,  and  at  the  same  time  claiming  that  the  responsibility 
for  this  danger  rests  with  W*  F.,  because  of  his  stubborn  refusal 
to  go  ahead  with  them. 

It  is  the  claim  of  Stuart  and  of  Otterson  that  W,  F.  is  bound 


LEGAL  ACTIONS  241 

by  agreement  to  their  method  of  financing.  They  have  never 
brought  forth  any  plan,  but  they  now  insist  that  they  want  to 
do  so,  and  that  nobody  else  has  a  right  to  do  so.  At  the  bankers* 
meeting  of  December  17th,  in  the  presence  of  about  thirty  men, 
their  lawyer,  Richard  Dwight,  had  stated  that  it  was  their  inten- 
tion to  retire  from  the  whole  affair;  and  as  Dwight's  clients  were 
present  wlren  this  statement  was  made,  the  statement  was  binding 
upon  them.  But  they  now  claim  that  the  word  "retire*  naeant 
that  they  were  retiring  from  the  room,  not  from  the  trusteeship. 
The  fact  was  that  they  didn't  retire  from  the  room,  but  stayed 
right  these,  and'the  court  had  before  it  the  affidavits  of  Benjamin 
Reass,  Jacob  L.  Rubenstein,  and  Prof.  John  T.  Madden,  declar- 
ing that  everyone  present  had  understood  that  Ottersooi  and 
Stuart  were  through  with  the  Fox  companies  and  their  financing 
forever. 

But  now  they  are  back  again,  and  Stuart  is  standing  upon  the 
agreement  whereby  he  has  preferential  rights  to  the  Fox  financ- 
ing. He  claims  that  Fox  cannot  have  his  financing  done  by  any- 
body else,  because  an  agreement  forbids  him  to  issue  long  term 
securities  having  priority  to  the  Halsey,  Stuart  loan.  Of  course 
the  purpose  of  the  new  financing  is  to  pay  off  that  loan,  and  to 
pay  off  tiie  Telephone  Company's  loan,  and  all  the  baric  loans* 
But  the  high-priced  lawyers  of  Halsey,  Stuart  are  not  able  to 
understand  this  detail,  and  they  donrt  expect  the  court  to  under- 
stand it. 

But  all  the  thirteen  banks  to  which  Fox  and  his  companies  owe 
money  have  brought  court  actions  and  are  demanding  receivers, 
and  the  danger  is  imminent  and  deadly.  Even  Samuel  Ufttermyer 
is  frightened  by  it,  and  has  written  a  letter  in  which  he  ttrges  his 
client,  *Vith  all  the  power  he  possesses  and  with  all  the  sincerity 
he  can  muster/'  to  preserve  the  companies  by  going  forward  with 
the  Stuart-Otterson  trusteeship.  Greenfield  also  writes  urging 
this — Greenfield,  of  course,  has  the  job  of  collecting  $10,000,000 
for  his  securities  copapany.  Only  W.  F.  and  his  wife  stand  out 
and  refuse  to  yield. 

The  lawyers  appear  before  Judge  Coleman,  and  tell  him  about 
this  insane  stubbornness;  they  have  public  hearings  and  private 
hearings,  and  word  is  brought  to  W.  F.  that  the  judge  insists  cm 
his  agreeing  to  three  trustees  for  his  voting  shares  and  turning 


242     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

in  the  resignations  of  his  directors.  If  he  refuses,  Judge  Coleman 
will  act  at  once.  All  the  judge  has  to  do  is  write  his  name  at 
the  bottom  of  a  paper,  naming  a  receiver,  and  W.  F.  is  out  of 
his  companies,  and  the  courts  of  the  entire  world  will  proceed  to 
hand  their  friends  jobs  at  the  expense  of  the  Fox  stockholders. 
But  W.  F.  stands  like  a  rock,  insisting  that  if  a  receiver  is 
appointed  and  the  companies  destroyed,  it  will  be  because  Wall 
Street  forces  it,  and  not  because  he  consents.  He  says : 

"I  knew  better  than  all  the  Untermyers  and  all  the  judges  in 
the  world  that  our  companies  didn't  need  receivers,  because  I 
knew  their  earning  power,  and  there  was  no  way  of  my  under- 
standing that  any  judge  who  meant  to  be  fair  and  equitable  could 
dream  of  a  receivership  here." 

One  day  W.  F.  received  a  telephone  call,  ordering  him  to 
come  to  Judge  Coleman's  chambers.  A  judge  is  permitted  to 
talk  with  the  defendant  in  a  case,  provided  the  lawyers  of  the 
other  side  consent.  W.  F.  suspected  that  his  own  lawyers  had 
consented  also.  He  pictured  Untermyer  as  saying  to  Coleman : 
"I  can't  control  my  client.  You  call  for  him."  The  idea  was 
that  the  court  was  to  act  as  a  mediator,  to  persuade  Fox  to  go 
along  with  the  voting  trusteeship. 

W.  F.  was  summoned  for  1  o'clock.  It  so  happened  that  he 
had  made  an  engagement  which  he  considered  very  important — 
a  friend  whom  he  had  to  consult  was  going  out  of  town.  The 
result  was  that  W.  F.  did  not  reach  Coleman's  office  until  1 :45 ; 
and  court  was  to  convene  at  2.  Let  him  tell  in  his  own  words 
the  story  of  this  curious  adventure: 

"This  court  room  was  not  located  in  a  building  where  justice 
Is  supposed  to  be  dealt  out,  but  rather  was  located  in  an  ordinary 
loft  space.  Judge  Coleman  was  holding  court  in  a  room  in  the 
Woolworth  Building,  and  it  was  filled  to  suffocation  by  lawyers 
and  curiosity  seekers  and  newspaper  men.  The  corridors  leading 
to  this  room  were  lined  with  men  mumbling  and  talking.  Every- 
one seemed  to  know  that  Fox  had  been  sent  for,  and  that  the 
judge  was  waiting  for  him ;  that  he  was  supposed  to  appear  at 
1  o'clock,  and  here  it  was  1 :45  when  he  walked  in.  I  can  imagine 
the  speculation  that  was  going  on  as  to  whether  he  was  coming 
at  all.  The  atmosphere  was  tense,  but  I  was  managing  to  be 
calm.  Again  and  again  I  reminded  myself  that  God  had  been 


LEGAL  ACTIONS  245 

good  to  me,  and  that  I  knew  He  was  not  going  to  desert  me 
now.  I  knew  I  had  no  occasion  for  excitement.  The  whole 
world,  the  judge,  the  attorneys,  and  my  opponents  could  be 
excited,  but  I  had  to  remain  calm. 

"Many  years  before,  when  one  of  my  girls  was  twelve  and  the 
other  was  nine,  foolishly  the  older  was  being  taught  how  to  drive 
an  automobile.  We  lived  at  the  time  at  Mt.  Hope  in  the  Bronx. 
There  was  a  steep  hill,  and  this  child  was  driving  the  car  down 
this  hill.  Instead  of  applying  her  brakes  when  she  noticed  a 
street  car  coming,  she  stepped  on  the  accelerator.  Instead  of  the 
car  being  stopped,  it  came  down  faster.  The  motorman  had  seen 
this  car  racing  down,  and  when  the  two  vehicles  came  to  a  stop 
there  was  not  an  inch  of  space  between  the  automobile  and  the 
street  car.  My  younger  daughter  sat  in  the  rear  seat,  and  that 
night  I  heard  her  say  to  the  sister :  *You  make  me  sick.  You 
always  do  that.  You  became  frightened;  you  took  your  hands 
off  the  steering  wheel,  threw  them  up  in  the  air  and  sErieked. 
What  is  the  use  of  having  a  head  if  you  lose  it  just  when  you 
need  it  the  most?' 

"Here  I  was  going  down  town  to  meet  Judge  Coleman,  and  I 
heard  clearly  this  child  saying:  'What  is  the  use  of  having  a 
head  if  you  lose  it  just  when  you  need  it  the  most?* 

"While  riding  down  town,  I  was  accompanied  by  Harry  Sund- 
heim,  one  of  my  lawyers,  and  he  was  rehearsing  me  as  to  what 
to  say  to  the  judge.  He  said :  *I  know,  W.  R,  your  inclination 
to  become  loud,  and  you  may  irritate  the  judge.  Be  sure  you 
don't  do  that.  If  his  judgment  sounds  wise,  follow  it/  He  gave 
me  a  line  of  talk  I  was  to  have  with  this  judge,  none  of  which 
was  of  any  value  to  me,  none  of  which  would  have  helped  my 
situation.  So  when  I  entered  this  building  and  arrived  on  the 
floor  where  this  court  room  was,  I  found  a  pitch  of  excitement 
so  intense  that  my  good  friend  Reass  was  walking  along  this 
corridor,  and  I  wanted  to  greet  him,  but  he  didn't  see  me.  I 
thought  he  looked  me  square  in  the  face,  but  he  was  so  wrapped 
up  in  what  he  was  going  to  do  when  court  opened  that  he  didn't 
even  see  me.  I  met  Untermyer,  who  was  all  excited,  and  he  told 
me  the  judge  was  upset  because  I  was  late. 

"I  was  ushered  into  a  room  which  I  should  say  was  about 
ten  feet  long  and  five  feet  wide.  This  was  the  room  where  the 


244     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

judge  and  I  were  to  have  this  confidential  talk.  He  was  annoyed, 
irritated,  and  excited  at  the  fact  that  I  had  disregarded  his  in- 
structions to  be  there  at  1  o'clock,  and  this  was  1:45.  He 
inquired  how  dared  I  disobey  his  instructions.  Didn't  I  know  h^ 
had  the  power  to  sign  a  set  of  papers  which  had  been  submitted 
to  him  and  which  would  be  the  doom  of  my  companies?  I  was 
exactly  the  type  of  man  that  had  been  described  to  him  by  the 
people  who  were  applying  for  receivership,  and  now  that  I  had 
delayed  the  thing,  he  would  talk  very  hastily. 

"The  judge  is  a  man  about  six  feet  tall,  and  wears  glasses ;  he 
has  a  head  of  gray  hair  and  is  clean-shaven.  Perhaps  I  am 
prejudiced,  but  if  I  were  asked  to  describe  him  in  full,  I  would 
say  he  was  saintly.  He  was  taller  than  I,  and  I  looked  up  to 
him.  When  he  was  angry  his  face  was  flushed.  We  sat  down; 
I  was  sitting  so  close  to  him  that  our  knees  touched,  and  I  could 
look  him  right  into  the  face.  He  wanted  me  to  place  in  his  hands 
the  resignations  of  my  directors  at  once,  and  unless  I  did  that 
and  did  it  immediately,  or  unless  I  promised  to  do  it  immediately, 
he  would  walk  right  into  his  court  room  and  appoint  a  receiver 
for  these  companies.  He  talked  for  ten  minutes,  and  I  listened 
to  him.  I  still  remembered  what  my  little  girl  had  said,  and  I 
didn't  propose  to  lose  my  head,  I  moved  nearer  to  him,  as  close 
as  possible,  and  I  looked  him  square  in  the  eyes  and  said:  'Look 
here,  your  Honor,  I  have  a  very  high  regard  for  you  and  for  your 
court,  and  no  threats  that  you  make  to  me  have  any  effect  on 
me  at  all.  You  are  not  going  into  that  room  and  sign  an  applica- 
tion for  receivership — you  have  no  intention  of  doing  it — you  are 
not  that  type  of  a  judge/ 

"All  the  while  £  felt  my  bones  up  against  his.  I  said :  *If  you 
were  sitting  in  that  court  room  in  there  and  trying  a  case  that 
involved  $1,000,  you  would  sit  there  calmly  and  carefully  until 
the  plaintiff  had  presented  his  complete  case,  then  you  would 
listen  to  the  witnesses  for  the  defense,  and  at  the  conclusion  of 
that  you  would  go  to  your  private  chambers  and  give  the  matter 
careful  consideration  before  you  rendered  a  judgment  which 
involved  $1,000.  This  case  involves  hundreds  of  millions,  and 
all  you  have  heard  are  those  who  want  a  receiver.  You  have  not 
heard  my  side  of  the  story.  Even  if  I  had  come  at  1  o'clock  I. 
could  not  have  told  it  all  to  you.  I  am  not  going  to  give  you 


LEGAL  ACTIONS  245 

any  resignation  or  papers,  and  I  dare  you  to  go  into  your  room 
and  sign  an  application  for  receiver.' 

"He  drew  back  and  said,  1  .warn  you  that  I  will  appoint  a 
receiver  when  I  walk  out  of  here.'  I  said,  'Oh,  no,  you're  not 
going  to  sign  an  application  for  receiver  until  such  time  as  you 
have  familiarized  yourself  with  every  fact  in  this  case.  THis 
morning  you  have  had  no  such  opportunity/  Judge :  'Will  you 
go  through  with  this  trusteeship  in  modified  form?'  Fox:  *No, 
sir.'  Judge :  "I  will  sign  this  application  for  receivership/  Fox : 
"No,  you  won't/  It  was  with  'Yes,  I  will/  and  'No,  you  won't/ 
that  he  walked  out,  and  of  course  he  didn't  sign  the  application 
for  receiver. 

"I  had  never  met  him  before  that  day  and  have  never  met 
him  since.  He  asked  one  of  the  lawyers  in  court,  'Have  you  ever 
had  the  privilege  of  talking  to  Mr.  Fox?'  and  added,  'Well,  I 
have/  What  impression  I  created  at  that  conference  I  can't 
imagine.  Whether  it  is  because  he  is  a  good  judge  of  human 
nature  that  he  never  did  sign  an  application  for  receivership; 
whether  it  was  because  of  his  contact  with  me  or  not,  I  don't 
know.  Whether  my  pressing  my  knees  to  his  and  penetrating 
right  through  his  brain,  whether  looking  into  my  eyes  he  felt  and 
knew  that  I  was  not  deserving  to  be  destroyed,  and  that  I  was 
worth  helping  and  protecting  by  the  powers  he  possessed  as  judge 
of  that  court,  I  don't  know.  If  I  had  hypnotized  him  that  day, 
he  had  months  to  get  over  the  spell  and  change  his  mind.  If  I 
were  asked  now  as  to  why  he  so  staunchly  stood  by  to  save  these 
companies  for  the  benefit  of  their  stockholders,  I  would  have  to 
say  that  it  was  because  he  read  in  the  eyes  of  the  lawyers  of  the 
Telephone  Company  that  their  words  were  insincere,  that  their 
purpose  was  to  capture  these  companies,  that  they  had  planned 
my  destruction,  and  that  he  was  not  going  to  permit  the  power 
of  his  court  to  be  used  unjustly. 

"When  I  got  downstairs  I  met  my  Philadelphia  attorney.  He 
was  anxious  to  know  whether  I  had  followed  his  instructions. 
He  said :  'I  was  standing  right  outside  of  that  door,  and  while  I 
could  not  hear  what  you  were  saying,  I  knew  that  you  were  talk- 
ing too  loud,  and  you  must  have  disobeyed  my  instructions/ 
I  told  him  what  I  had  said,  and  he  heartily  disapproved.  He 
said,  'Long  before  we  get  back  to  your  headquarters  you  will  read 


246     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

in  the  papers  that  a  receiver  has  been  appointed  for  your  com- 
panies/ He  anxiously  waited,  and  after  court  adjourned  he 
found  that  no  receiver  had  been  appointed." 

One  most  curious  detail  in  connection  with  this  duel  of  wills : 
the  behavior  of  the  stock  market  in  relation  to  it.  Judge  Cole- 
man's  court  was  not  the  only  place  that  was  crowded;  so  also 
was  the  trading  post  where  Fox  Film  shares  were  sold  on  the 
floor  of  the  Stock  Exchange.  A  total  of  494,000  A  shares  were 
sold  on  that  day— and  with  only  820,000  A  shares  outstanding! 
At  the  outset,  the  price  of  the  stock  was  22.  On  the  report  that 
W.  F,  had  consented  to  deliver  the  resignations  of  his  directors, 
the  price  rose  to  34.  On  the  report  that  he  had  refused,  the 
price  sank  again  to  25 ! 


REEL  TWENTY-ONE 
THE  SCALES  OF  JUSTICE 

E,T  us  now  go  into  the  court  room,  where  the  eminent  counsel 
were  assembled  before  Judge  Coleman  for  a  hearing  on 
motions  for  receivership.  The  date  was  January  27.  There  were 
three  lawyers,  Berenson,  Kresel,  and  Lazarus,  representing  groups 
of  stockholders;  Bogue  representing  Halsey,  Stuart,  and  Pratt 
representing  the  Telephone  Company;  Swaine  representing  the 
Lehman  group,  the  new  bankers ;  Untermyer  and  Reass  repre- 
senting the  Fox  companies.  Untermyer  presented  to  the  judge 
the  resignations  of  the  directors  of  Fox  Film  and  Fox  Theatres, 
but  upon  important  conditions:  they  were  deposited  with  the 
court,  to  be  held  until  the  court  received  the  resignations  of  Stuart 
and  Otterson,  the  abrogation  of  the  voting  trust  agreement,  and 
the  depositing  of  the  Fox  voting  shares  with  the  court.  There 
were  to  be  new  trustees  named,  and  these  trustees  were  to  elect 
a  new  board  of  directors. 

All  this,  of  course,  was  to  be  part  of  the  new  financing 
arrangement,  the  Lehman  plan.  Untermyer  explained  that  it 
was  the  result  of  "a  week  of  constant  effort  by  day  and  night." 
This  plan  was  going  to  save  the  companies,  he  said,  and  he 
assured  the  court  that  there  could  be  no  question  of  "their  over- 
whelming solvency.  Their  earnings  in  the  past  two  weeks  are 
said  to  be  the  largest  in  their  history."  He  went  on  to  express 
his  amazement  at  the  attitude  of  Halsey,  Stuart : 

"Messrs.  Halsey,  Stuart  .&  Company  have  brought  suit  and 
are  pressing  for  payment,  although  by  their  terms,  the  notes  are 
not  due  until  April  1st.  They  claim  that  the  giving  of  obligations 
by  the  Film  Company,  having  more  than  120  days  to  run,  on  the 
purchase  of  the  English  chain  of  theatres,  constituted  a  default 
that  matured  the  notes  before  their  due  dates,  although  I  under- 
stand, and  the  papers  submitted  to  you  show  that  they  were  not 

247 


248     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

only  familiar  with  but  assented  to  the  deal  to  consummate  the 
English  purchase,  and  in  a  sense,  participated  in  the  negotia- 
tions/' 

Halsey,  Stuart  answered  through  their  attorney,  Morton 
Bogue.  He  spoke  of  this  "very  elaborate  gesture."  What  it 
came  to  was  that  Stuart  and  Otterson  were  asked  to  get  out.  He 
found  fault  with  the  plan  because  it  was  indefinite.  "There  is  no 
money  in  sight,  and  I  do  not  see  why  we  should  be  asked  to 
forego  our  interests  or  to  desert  the  other  creditors  and  con- 
sent to  a  new  management  where  there  is  no  promise  before  the 
court  that  our  debt  will  be  paid  or  that  anybody  else  will  be 
paid.3' 

Bogue  had  been  invited  to  a  conference  with  Swaine,  repre- 
senting the  new  bankers,  but  he  had  considered  that  "a  prepos- 
terous suggestion.  I  saw  no  point  in  getting  into  a  discussion 
representing  bankers  and  those  supposed  to  have  an  interest  in 
tibe  new  financing,  and  being  there  in  a  position  to  help  Mr.  Fox 
break  his  agreement  with  my  clients."  His  clients  would  have 
nothing  to  do  with  this  Lehman  plan,  not  even  to  the  extent  of 
getting  out  of  the  way  of  it.  "It  is  not  our  financial  program, 
and  although  we  are  here  trying  to  protect,  and  we  want  to  pro- 
tect all  creditors,  we  would  rather  have  the  receivership  imme- 
diately, and  if  this  plan  could  be  worked  out,  the  receivership 
can  be  terminated  quickly/' 

In  other  words,  here  was  the  attorney  for  Halsey,  Stuart, 
stating  in  open  court  that  they  preferred  to  throw  this  concern 
into  bankruptcy,  rather  than  permit  another  banking  group  to 
finance  it*  They  were  proposing  to  throw  it  into  bankruptcy, 
because  of  notes  which  did  not  fall  due  for  more  than  two 
months.  They  had  rented  a  house  to  a  tenant,  and  now  they  came 
td  court  and  asked  the  court  to  throw  the  tenant  out  and  put  his 
furniture  on  the  street,  because  they  did  not  believe  the  tenant 
would  be  able  to  pay  his  next  installment  of  rent  when  it  came 
due! 

The  court  was  adjourned  until  the  next  day,  to  give  the 
lawyers  a  chance  to  consult  with  their  clients.  At  this  second 
hearing,  Unternayer  read  to  the  court  the  new  voting  trust 
agreement,  and  Bogue  again  refused  to  present  his  clients'  resig- 
nations. 


THE  SCALES  OF  JUSTICE  249 

"So  far  as  my  clients  are  concerned,  they  fed  that  they  should 
not  withdraw  from  the  position  they  took  yesterday  in  requesting 
a  receivership,  because  they  feel  that  there  is  a  possibility  that 
no  plan  will  be  presented,  and  we  will  be  that  much  further 
behind ;  and  they  feel  also  that  there  may  be  a  plan  which  will 
not  be  agreeable  to  Mr.  Fox,  and  we  will  be  that  much  further 
behind,  and  we  may  come  to  a  point  where  we  will  haye  to  have 
a  receivership  at  a  very  unseasonable  time  of  the  year  in  the 
film  business/' 

The  case  was  adjourned  for  two  weeks  to  give  the  Lehman 
group  a  chance  to  complete  their  financial  plan.  Two  weeks  later 
a  still  larger  group  of  Wall  Street  lawyers  assembled,  and  Swaine 
presented  the  complete  Lehman  plan,  providing  for  the  issue  of 
$65,000,000  worth  of  new  securities  of  Fox  Film  and  $40,000,000 
of  Fox  Theatres.  There  was  to  be  a  9  per  cent  underwriting 
commission,  and  in  addition  the  banking  group  were  to  receive 
135,000  shares  of  stock.  They  had  tried  to  get  the  Tri-Ergon 
and  Grandeur  patents,  and  had  obtained  a  free  license  tinder 
these  patents. 

By  this  plan  the  Halsey,  Stuart  notes  and  the  Telephone 
Company  note  and  all  the  banking  obligations  with  which  tliese 
companies  had  any  concern  were  to  be  paid  in  full,  prineifpal 
and  interest.  So  they  should  have  been  satisfied — or  should  they? 
Could  it  be  that  their  dissatisfaction  was  stimulated  by  a  revela- 
tion made  by  Untermyer:  "We  have  a  statement  here  showing 
that  the  Fox  Film  Corporation  earned  over  $2,000,000  the  last 
four  weeks,  and  that  its  business  is  greatly  on  the  increase, 
notwithstanding  the  troubles  that  it  is  having  now  in  the  way  of 
financing." 

Next  Berenson  addressed  the  court ;  the  Boston  lawyer  who 
was  a  friend  of  Blmny,  the  agent  of  Harley  Clarke,  and  who  was 
subsequently  paid  a  quarter  of  a  million  dollars  by  Harley  Clarke 
out  of  the  treasury  of  Fox  Theatres,  The  basis  of  Berenson's 
objection  was  that  this  plan  was  going  to  cost  the  stockholders 
too  much  money.  On  one  computation  it  was  $20,000,000,  and 
on  another  computation  it  would  run  up  to  as  much  as  $35,000,- 
000.  He  was  figuring  in  the  10  per  cent  redemption  fee  of  the 
bonds.  Said  Untermyer:  "Do  not  the  stockholders  get  the 
premium  if  they  take  the  bonds?"  So  Berenson  dropped  that 


250     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

argument  He  figured  another  large  sum  by  taking  the  value  of 
the  shares  at  their  book  value — about  three  times  their  market 
value.  The  court  asked  if  Berenson  had  any  suggestions  as  to 
how  else  to  raise  the  money,  and  Berenson  pleaded  for  a  receiver- 
ship, so  that  the  assets  in  the  companies  could  be  sold.  The 
Loew  shares,  for  which  W,  F.  had  paid  $75,000,000,  could  now 
be  sold  by  a  receiver  for  $23,000,000.  That  was  the  Boston 
lawyer's  idea  of  how  to  protect  his  clients,  the  owners  of  620 
shares  of  stock ! 

Who  else  had  a  plan,  asked  the  court,  over  and  over  again, 
and  Berenson  suggested  that  Bogue,  representing  Halsey,  Stuart, 
should  be  asked  whether  his  clients  had  a  plan.  And  so  came  a 
repetition  of  the  extraordinary  scene  of  two  weeks  back,  when 
Bogue  refused  to  give  up  his  clients'  rights  under  the  preferential 
agreement  to  do  Fox  financing.  "The  new  plan  is  taking  the 
only  free  asset  that  Fox  Theatres  has,  the  Loew  stock,  and  pro- 
posing to  pledge  this  equity/'  That  this  equity  was  being  pledged 
in  order  to  pay  for  itself — that  Fox  Theatres  didn't  really  own 
the  equity  but  merely  owed  for  it — this  was  a  detail  beyond  the 
comprehension  of  a  great  Wall  Street  lawyer.  Samuel  Untermyer 
had  to  remind  him :  "They  are  pledged  now." 

Said  the  Court :  "Will  you  consent  that  your  arrangement  for 
future  financing  be  withdrawn?  Will  you  consent  to  that  if  the 
present  bankers  go  ahead  with  the  plan?" 

Said  Bogue;  "I  am  not  prepared  to  say  that." 

He  went  on  to  explain  that  he  would  like  to  consult  with  his 
clients.  And  now  came  that  dangerous  "reptyle,"  Samuel  Unter- 
myer, tearing  at  the  veil  which  covered  this  dark  mystery.  Said 
Untermyer:  "But,  your  Honor,  this  proposes  to  pay  these  gentle- 
men every  dollar  of  their  debts-  What  are  they  doing  there? 
What  is  it  they  want  ?  They  do  not  want  their  money.  Evidently 
they  want  something  else." 

And  again: 

"Mr.  Untermyer:  This  is  a  matter  of  some  importance,  your 
Honor,  and  I  think  we  should  be  heard  upon  it. 

"The  Court:  Yes. 

"Mr.  Untermyer:  Your  Honor  realizes,  of  course,  that  so  far 
as  ^these  gentlemen  are  concerned  as  creditors  of  these  corpo- 
rations, this  plan  proposes  to  pay  them  principal  arid  interest. 


THE  SCALES  OF  JUSTICE  251 

"The  Court :  Yes,  that  is  apparent 

"Mr.  Untermyer:  Your  Honor  realizes  that  the  securities 
that  they  may  have  issued  on  various  theatres  in  the  past  and 
on  their  own  footing;  that  they  are  very  much  increased  in  safety 
by  the  furnishing  of  this  additional  money  to  the  Theatres  com- 
pany. 

"The  Court:   I  understand  that. 

"Mr.  Untermyer :  They  are  not  jeopardized.  They  are  helped 
and  materially  helped  by  that  fact,  so  that  there  must  be  some- 
thing else  behind  this.  Let  us  see  what  there  is  behind  it.  These 
gentlemen  have  a  bankers1  agreement  for  a  fifteen-year  prefer- 
ential contract.  It  is  a  most  unusual  thing.  In  other  words,  the 
Fox  Film  and  the  Fox  Theatres  could  not  do  any  financing  for 
the  next  fifteen  years  without  first  giving  these  gentlemen  the 
opportunity  to  do  it ;  and  they  also  have — I  do  not  want  to  create 
any  ill  feeling  here — they  have  another  arrangement  which — 

"The  Court  (Interposing) :  Mr.  Untermyer — 

"Mr.  Untermyer ;  I  am  not  going  to  go  into  that. 

"The  Court:  It  is  my  judgment  that  we  ought  not  to." 

So  you  see  we  are  not  allowed  to  tear  the  veil !  The  dark 
mystery  must  not  be  shown  to  our  eyes ! 

There  was  an  adjournment  for  a  couple  of  days,  and  again 
we  find  Bogue  trying  to  block  the  proceedings,  and  Untermyer 
probing  the  mysteries: 

"Mr.  Untermyer :  I  do  not  understand  Mr.  Bogue's  attitude, 
your  Honor,  and  I  would  like  to  be  heard  on  it  I  understand 
Mr.  Bogue  is  representing  Halsey,  Stuart.  This  plan  proposes 
to  pay  them  in  cash  for  notes  that  have  been  selling  at  50  cents 
on  the  dollar  and  now  are  selling  at  70  cents  on  the  dollar, 
for  which  their  clients  are  to  get  100  cents  on  the  dollar.  What 
is  this  policy  of  theirs?  It  looks  a  good  deal  like  a  dog  in  the 
manger  policy,  and  that  is  all  there  is  to  it,  I  think. 

"The  Court:  I  do  not  think  you  ought  to  characterize  it, 
Mr.  Untermyer. 

"Mr.  Untermyer:    They  said  this — 

"Mr.  Bogue :    Just  one  second,  please. 

"Mr.  Untermyer :    May  I  finish  ? 

"The  Court:    Yes. 

"Mr.  Untermyer:    The  position  taken  by  Mr.  Bogue  is  am 


252     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

extraordinary  one.  He  said  that  in  years  past,  Halsey,  Stuart 
have  made  loans  on  various  pieces  of  real  estate,  have  issued 
bonds  that  have  gone  to  the  public  of  the  Theatres  Corporation — > 
by  the  way,  it  is  not  here — the  Film  Corporation  is  here,  but  they 
have  made  a  loan.  Now,  then,  they  seem  to  think  that  a  receiver- 
ship will  be  better  security  for  those  underlying  loans  than  would 
the  putting  of  $35,000,000  behind  them/' 

Bogue  objected  to  having  his  position  stated  by  Untermyer, 
and  so  he  stated  it  himself.  His  clients  refused  to  give  up  their 
preferential  option.  His  clients  were  prepared  to  submit  a  plan 
more  favorable  to  the  interests  of  the  stockholders.  If  Fox. 
would  not  agree  to  go  on  with  the  trusteeship  agreement  with 
Halsey,  Stuart,  that  was  Fox's  lookout,  and  Halsey,  Stuart  could 
not  be  penalized  for  that 

Tfaea  came  another  lawyer,  Pratt,  representing  Otterson  and 
the  Telephone  Company,  and  presenting  one  of  the  most  extraor- 
dinary arguments  that  I  ever  read  in  a  legal  document.  Said 
he :  "In  spite  of  the  fact  that  this  plan  provides  the  payment  of 
our  amount  in  full,  we  object  to  the  plan  for  this  reason:  we 
bave  a  fifteen-year  contract  with  the  Fox  Company,  covering  the 
talking  motion  pictures,  and  we  do  not  feel  that  this  plan  provides 
sufficient  latitude  for  future  financing  for  them  to  properly 
carry  on  the  business  that  is  contemplated  by  that  contract,  and 
that  it  is  necessary  to  work  out  a  plan  which  is  comprehensive,  for 
tfae  future,  as  well  as  taking  care  of  the  present  needs." 

One  important  point  to  note :  Mr.  Pratf  s  clients  did  not  have 
tfaJs  fifteen-year  contract  with  Fox  Film.  The  contract  had  been 
negotiated  but  not  signed,  and  the  Telephone  Company  knew  that 
if  W.  F,  succeeded  in  paying  off  the  debt  to  them,  he  would  never 
take  a  l$ase  on  their  patents,  but  would  proceed  upon  the  basis 
of  his  own  Tri-Ergon  rights. 

In  order  to  get  the  full  meaning  of  this  claim  of  the  Telephone 
Company,  made  in  open  court,  let  us  bring  it  down  from  the  misty 
regions  of  high  finance  to  the  level  of  ordinary  human  affairs. 
You  are  running  a  small  corner  grocery,  and  one  day,  because 
you  want  to  enlarge  your  store,  you  borrow  $1,000  from  your 
wholesaler,  and  give  him  a  note  for  a  year.  Some  time  before 
this  note  falls  due,  the  wholesaler  decides  that  you  are  not  gxnng 
to  be  able  to  meet  the  note,  and  proposes  to  move  in  and  take 


THE  SCALES  OF  JUSTICE  253 

possession  of  your  business.  When  you  assure  him  that  you  have 
a  plan  by  which  you  win  have  the  $1,000  in  a  few  days,  and  will 
pay  off  the  note,  he  answers  that  that  is  not  satisfactory  to  him, 
because  you  have  contemplated  signing  an  agreement  to  purchase 
groceries  f rom  him  for  the  next  two  or  three  years,  and  he  is 
afraid  that  under  this  new  plan  you  will  conduct  your  business 
in  such  a  way  that  you  will  not  be  able  to  buy  enough  groceries 
from  him,  and  "to  properly  carry  on  the  business  that  is  con- 
templated by  that  contract" 

Study  this,  you  little  business  man  of  America,  and  learn  how 
precarious  is  your  hold  upon  your  enterprise,  when  you  come 
within  rea«Ii  of  the  tentacles  of  the  great  '?eleph,one  ©etopus! 
And  especially  when  your  earnings  are  increasing  at  the  rate  of 
half  a  million  dollars  a  week !  It  seems  to  me  that  this  stateipaent 
made  by  George  C.  Pratt  in  open  court  justifies  and  proves  every 
charge  of  conspiracy  which  William  Fox  has  made  and  which  I 
have  repeated  in  this  book. 

And  then  another  odd  coincidence :  the  very  day  after  Pratt's 
first  appearance  in  court,  and  his  demand  for  a  receivership  on 
behalf  of  his  client,  the  Telephone  Company,  the  president  of 
that  company,  Walter  S.  Gifford,  appeared  in  Washington  to 
testify  about  another  matter  before  the  Senate  Committee  o& 
Interstate  Commerce,  A  senator  asked  him  a  question,  what 
about  the  loan  his  company  had  made  to  the  Fox  companies;  and 
Gifford  answered  that  he  was  not  worried  about  that,  he  knew 
the  companies  were  perfectly  sound.  If  he  knew  that,  why  was 
he  sending  a  lawyer  to  court  to  state  exactly  the  opposite? 

The  reply  of  the  Court  to  this  demand  was :  "Mr.  Pratt,  I  am 
absolutely  convinced  from  my  talks  with  Mr.  Fox  and  my  obser- 
vation of  his  conduct  in  this  case  that  he  never  will  consent  to 
entering  into  an  agreement  with  Halsey,  Stuart  &  Company  and 
with  the  Electric  Research  Laboratories,  The  plan  that  you  sug- 
gest as  possible  can  only  be  worked  out  by  means  of  receivership. 
I  am  convinced  of  that/* 

Judge  Coleman  went  on  to  pin  the  lawyers  down  on  this  point 
Fox  was  blocking  the  Telephone  Company  from  taking  possession 
of  his  business  through  the  voting  trust  agreement.  Said  the 
Court :  "Can  you  point  out  any  way  in  which  I  can  prevent  him 
from  blocking  it  except  by  means  of  a  receivership? 


254     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"Mr.  Pratt:    I  cannot,  sir. 

"The  Court;    There  is  no  way,  is  there? 

"Mr.  Pratt:    There  is  no  other  way/' 

And  here  is  Untermyer  again  fighting  for  a  hearing:  "I 
object  to  the  responsibility  for  this  situation  being  placed  to  any 
extent  upon  Mr.  Fox  or  his  unwillingness  to  go  on  with  Halsey, 
Stuart  &  Company  or  anybody  else.  The  responsibility  for  this 
situation  rests  right  at  the  door  of  Halsey,  Stuart  &  Company, 
and  now  of  the  Electric  Research  Laboratories. 

"The  Court :    No,  Mr.  Untermyer,  I  cannot  permit  you — 

"Mr.  Untermyer:  Your  Honor  does  not  seem  to  want  to 
permit  me  to  be  heard.  I  want  to  be  heard. 

"The  Court :  I  want  you  to  be  heard  on  matters  that  are  up 
for  discussion.  On  those  matters  I  am  glad  to  hear  you,  but  on 
matters  that  we  cannot  do  anything  about  I  think  it  would  be  a 
mistake  to  attempt  to  deal  with  them. 

"Mr.  Untermyer:  But,  your  Honor,  you  started  by  saying 
that  Mr.  Fox  would  not  do  this  and  Mr.  Fox  would  not  do  that, 
and  these  gentlemen  have  made  certain  objections  and  I  am 
answering  them,  A  week  ago  or  two  weeks  ago  Mr.  Bogue  stood 
tip  here  and  said  that  he  wanted  a  receivership  for  Halsey, 
Stuart  &  Company.  This  is  about  as  extraordinary  a  situation,  I 
think,  as  has  ever  been  presented  in  a  large  transaction.  Here 
are  two  creditors,  one  for  $12,000,000  and  the  other  for  $15,000,- 
000,  who  are  confronted  by  a  plan  of  three  of  the  most  reputable 
banking  houses  in  the  country  to  pay  their  principal  and  interest 
in  full,  and  they  are  objecting  to  that  plan/' 

But  Bogue  and  Pratt  will  not  give  way.  They  will  not  cancel 
the  voting  trust  agreement.  They  will  continue  their  "dog-in- 
the-manger"  attitude.  Then  comes  a  new  lawyer,  Conboy,  rep- 
resenting some  more  stockholders,  and  he  is  indignant  because 
Fox  presumes  to  block  the  Halsey,  Stuart  plan,  and  he  says 
that  his  clients  prefer  the  alternative  of  a  receivership.  "That 
might  be  an  alternative  that  would  be  the  lesser  of  two  evils, 
because  if  your  Honor  appointed  a  receiver  for  this  corpora- 
tion, then  there  would  be  somebody  who  would  have  in  mind 
not  merely  Mr.  Fox's  individual  and  personal  and  selfish  inter- 
ests, but  the  interests  of  all  parties  who  are  concerned  with  this 
corporation.'* 


THE  SCALES  OF  JUSTICE  255 

Judge  Coleman  made  his  attitude  perfectly  plain.  He  would 
not  appoint  a  receiver  if  there  was  any  possible  way  to  avoid  it. 
The  Lehman  plan  seemed  to  offer  a  way  out,  and  he  would  give 
the  Fox  companies  an  opportunity  to  submit  this  plan  to  the 
stockholders.  The  court  would  not  make  any  recommendation 
to  the  stockholders,  but  the  stockholders  would  decide  whether 
or  not  they  wished  to  approve  this  plan.  If  Halsey,  Stuart  had 
a  plan,  and  wished  to  tell  the  stockholders  about  it,  that  was  up 
to  them.  If  anyone  else  had  a  plan  that  would  avoid  a  receiver- 
ship, the  court  would  hear  it. 

This  was  on  February  11,  and  on  March  5  the  stockholders 
held  their  meeting.  I  shall  tell  about  this  in  detail,  but  first  I 
think  I  shall  finish  with  Judge  Coleman.  On  March  27,  the  find 
hearing  was  held,  and  since  the  judge  could  not  be  moved  from 
his  determination  not  to  throw  these  two  prosperous  companies 
into  receivership,  Halsey,  Stuart  resorted  to  the  desperate  step 
of  having  their  attorney,  Bogue,  bring  a  charge  of  prejudice 
against  Judge  Coleman,  and  thus  take  the  case  out  of  his  hands. 
The  law  governing  this  proceeding  is  peculiar.  Judge  Coleman 
was  not  permitted  to  deal  with  the  truth  of  the  charges,  but 
merely  to  decide  whether  the  charges,  if  true,  would  disqualify 
him  to  deal  with  the  case.  He  was  then  obliged  to  retire,  and 
turn  the  case  over  to  another  judge. 

When  he  did  so,  an  extraordinary  scene  occurred  in  court, 
Robert  T.  Swaine,  attorney  for  the  Lehman  group,  asked  per- 
mission to  make  a  statement.  He  was  very  careful  and  polite 
about  it,  bttt  the  substance  of  his  remarks  was  that  an  affidavit 
had  been  filed  which  everybody  knew  to  be  false,  and  that 
Swaine's  desire  to  maintain  his  own  dignity  must  yield  to  his 
"public  dttty  of  protecting  the  good  name  of  the  United  States 
District  Court,  and  of  a  judge  who  has  been  tireless  m  his 
energy,  and  honest  and  upright  in  his  efforts  to  save  this  vast 
enterprise  from  the  disasters  of  receivership  into  which  the  filers 
of  this  false  affidavit  would  plunge  it." 

Swaine  went  on  to  tell  how  his  clients  had  come  into  the  case, 
and  the  substance  of  his  story  was  that  they  had  done  so  only 
after  conferences  with  the  Stuart  and  Otterson  crowd  and  their 
lawyers,  and  after  having  had  positive  and  repeated  assurances 
that  Stuart  and  Otterson  only  wanted  their  money,  and  wotijd 


18 


256     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

not  stand  in  the  way  of  any  plan  which  would  get  them  their 
money.  Said  Swaine; 

"I  regret  exceedingly  to  have  to  violate  the  confidence  that 
is  supposed  to  exist  between  lawyers  and  personal  friends,  for 
Mr.  Bogue  is  one  of  my  closest  personal  friends,  and  even  those 
events  do  not  shake  me  in  that  attitude.  I  went  to  Mr.  Bogue 
and  I  asked  Mr.  Bogue  if  his  clients  had  any  interest  in  this 
situation  if  their  indebtedness  was  paid  off.  I  understood  Mr. 
Bogue  to  assure  me  that  their  interest  in  this  situation  was  the 
payment  of  the  $15,000,000  obligation  to  the  Electrical  Research 
Products  Company,  the  $12,000,000  of  notes  issued  by  Halsey, 
Stuart  &  Company,  and  $4,000,000  of  bank  debt  which  had  been 
guaranteed  by  Halsey,  Stuart  &  Company  and  Electrical  Research 
Products  Company.  I  also  understood  Mr.  Bogue  to  believe  that 
Mr,  Fox  would  never  co-operate  in  putting  through  any  plan, 
but  I  equally  understood  him  to  say  that  if  Mr.  Fox  did  co-operate 
in  putting  through  a  plan  which  would  take  care  of  that  indebt- 
edness, no  obstacle  would  be  raised. 

"I  talked  to  Mr.  Pratt,  counsel  for  Mr.  Otterson,  within  an 
hour  of  the  time  I  came  to  your  Honor  to  present  a  plan.  I  had 
from  Mr.  Pratt  personally,  over  the  telephone,  the  assurance 
that  if  he  paid  the  indebtedness  to  the  Telephone  Company  there 
would  be  no  trouble  about  the  B  stock." 

Swaine  went  on  to  tell  how  Elisha  Walker  had  consulted 
Otterson  and  Charles  Stuart,  and  had  received  the  same  assur- 
ances. The  Lehman  group  had  therefore  gone  ahead  with  their 
plan— and  then,  when  they  brought  it  into  court,  the  other  side 
had  broken  its  word. 

You  have  noted  through  this  book  William  Fox  many  times 
accusing  Stuart  and  Otterson  of  making  false  statements:  for 
example,  of  withdrawing  from  his  affairs,  and  then  the  next 
day  denying  that  they  had  done  so.  Most  of  the  time  ^  these 
charges  have  rested  upon  the  word  of  W.  F.  In  a  few  minutes 
I  shall  show  you  Halsey,  Stuart  mailing  a  pamphlet  to  all  the 
Fox  stockholders,  full  of  charges  against  W.  F.,  and  W.  F. 
mailing  a  pamphlet  full  of  countercharges;  and  you  will  be 
uncertain  which  to  believe.  Do  not  overlook  the  fact  that  here 
in  the  court  record  is  the  charge,  made  by  an  obviously  high- 
minded  lawyer,  of  false  dealing  on  the  part  of  Halsey,  Stuart, 


THE  SCALES  OF  JUSTICE  257 

and  Otterson,  and  their  lawyers.  This  charge  is  all  the  more 
impressive  because  the  man  is  making  it  with  reluctance  and 
pain,  concerning  an  intimate  friend. 

I  was  interested  in  the  ethical  problem  here  involved,  and 
after  my  reading  of  the  court  record,  I  questioned  W.  F.  and  his 
attorney,  Reass,  about  it.  Here  is  this  discussion  as  the  stenog- 
rapher took  it  down  in  my  home : 

"Sinclair:  Now  about  Mr.  Bogue.  He  is  a  very  important 
person  in  that  procedure  before  Judge  Coleman.  He  is  accused 
of  having  lied.  Swaine  accused  him  of  it. 

"Fox :  Swaine  is  expressing  his  regrets  for  the  removal  of 
Coleman  from  the  case.  Morton  G.  Bogue  is  of  the  firm  of 
Beekman,  Bogue  &  Clark.  I  had  met  Mr.  Bogue  before  this  diffi- 
culty, in  connection  with  bond  issues  that  Halsey,  Stuart  had 
underwritten  for  the  Fox  subsidiaries,  and  my  relations  with  him 
were  rather  pleasant.  I  presume  he  was  doing  nothing  more  or 
less  than  any  lawyer  would  do  under  the  instructions  of  his  client, 
Halsey,  Stuart  &  Co. 

"Sinclair:  Does  a  lawyer  make  an  agreement  with  another 
lawyer  of  the  other  side  and  then  break  it? 

"Fox:  The  lawyer  should  not  do  that,  but  I  take  it  for 
granted  that  whatever  agreement  he  made  with  the  other  side,  he 
had  received  instructions  from  Halsey,  Stuart  not  to  carry  it  out* 
Of  course,  it  would  have  been  a  nice  thing  if  he  had  retired  from, 
the  case  rather  than  break  his  word. 

"Reass:  They  don't  make  agreements  that  their  clients  do 
not  approve  of,  and  when  he  broke  it,  it  was  because  his  clients 
wanted  it  broken.  He  wasn't  making  agreements  with  Swaine 
without  authority — adhering  to  them  for  weeks  and  then  breaking1 
them  at  the  last  minute. 

"Sinclair :  Was  there  no  penalty  or  disgrace  attached  to  such 
procedure? 

"Reass:  There  are  no  penalties  for  anything  Wall  Street 
does.  Lawyers'  ethics  are  for  the  poor  lawyers,  but  it  has  noth- 
ing to  do  with  Wall  Street.  They  have  a  code  all  their  own. 

"Sinclair:  Have  you  a  code  of  your  own?  Your  office  is 
not  very  far  from  Wall  Street. 

"Reass :    That  is  the  reason  I  can  speak  with  authority. 

"Fox :    What  Mr.  Sinclair  wants  to  know  is  this  .  „  * 


258     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"Sinclair:  The  reason  I  asked  about  Bogue  and  Swaine  is 
this:  here  is  one  lawyer  accusing  another  of  highly  unethical 
conduct,  and  I  wondered  what  the  consequences  were.  Can 
those  two  men  say  things  like  that  and  then  go  out  to  lunch? 

"Fox :    They  are  probably  the  best  of  friends. 

"Reass:  Swaine  represented  one  banking  group;  Bogue 
another.  He  tried  to  tell  the  court  the  agreement,  and  the  court 
interrupted  him.  The  court  wasn't  concerned  with  these  quarrels. 
Swaine  refused  to  get  Into  a  squabble  there. 

"Fox:  That  isn't  what  Mr.  Sinclair  wants.  He  wants  to 
know  is  it  customary  for  two  presumably  reputable  lawyers  to 
stand  In  open  court  and  charge  each  other  with  breaking  faith 
with  each  other,  and  then  continue  to  be  buddies  and  pals  after- 
wards. Mr.  Sinclair,  that  is  absolutely  customary. 

"Sinclair:  Here  am  I  prepared  to  present  this  story  to  the 
public,  and  this  deposing  of  Judge  Coleman  is  one  of  the  most 
dramatic  chapters  in  the  story.  Here  are  these  two  men  in  this 
fight.  I  have  to  tell  the  public  what  that  story  means.  Is  this  a 
picture  of  everyday  Wall  Street  ethics?  Is  It  proof  of  the 
extremes  to  which  these  men  were  going  in  their  effort  to  break 
Fox,  or  is  it  just  ordinary?  Is  it  the  way  they  do  business  all 
the  time? 

"Reass :  It  is  not  the  way  they  do  business.  You  can  fairly 
take  the  attitude  that  It  is  just  the  sort  of  rascality  of  Halsey, 
Stuart  to  carry  out  their  plans. 

"Fox:  You  will  find  they  are  social  friends  and  business 
friends.  My  experience  with  lawyers  isn't  that  animosity  that 
occurs  in  a  court  room  between  them  continues  by  them  in  their 
private  life  after  the  case  is  over.  My  experience  is  that,  regard- 
less of  how  they  fight  in  court  with  each  other,  when  the  case  is 
to  the  end,  that  is  the  end  of  the  controversy,  and  the  relations 
are  re-established  and  the  pleasantries  continue  as  heretofore,  A 
lawyer  usually  treats  a  matter  in  court  as  just  another  case.** 


REEL  TWENTY-TWO 
A  JUDGE   IN  BUSINESS 

IN  order  to  follow  through  the  hearing  before  Judge  Coleman, 
we  have  skipped  ahead  of  our  story.  We  must  now  return, 
to  attend  one  of  the  sessions  of  our  Fox  with  the  new  bankers, 
the  Lehman  group,  who  are  going  to  finance  his  companies.  We 
have  seen  these  bankers  in  court,  represented  by  their  high- 
minded  attorney,  Swaine,  who  tells  the  court  that  his  clients 
came  in  "to  assist  this  situation  solely  for  the  purpose  of 
endeavoring  to  save  it."  Bankers  with  such  altruistic  motives  are 
not  common  in  Wall  Street,  so  it  will  be  interesting  to  sit  in  with 
them,  and  observe  their  altruism  at  work. 

You  remember  that  we  left  Ostrer,  the  English  theatre  mag- 
nate, in  possession  of  $14,000,000,  which  W.  F.  had  paid  liira, 
and  with  $6,000,000  still  due,  and  a  chance  of  foreclosing  on  his 
Gaumont  shares  and  buying  them  in  for  a  million  or  so,  and 
without  losing  his  claim  for  the  $6,000,000.  If  the  Bancamerica- 
Blair,  Lehman  Brothers,  Dillon,  Read  crowd  really  want  to  "save 
the  situation/'  here  is  the  place  to  get  to  work.  They  are  advised 
by  W.  F/s  attorneys  in  London  that  no  more  delay  will  be 
permitted.  Unless  Ostrer  has  the  money  in  hand  before  3 
o'clock  on  the  following  day,  he  will  foreclose  on  the  Gau- 
mont shares.  Three  o'clock  London  time  is  11  o'clock  New  York 
time. 

So  W.  F.  begs  the  Lehman  group  to  lend  Fox  Theatres 
$6,000,000  for  forty-five  days;  that  being  the  time  between  the 
date  of  the  conference  and  April  15 f  when  the  bankers  are  pledged 
to  supply  $65,000,000.  The  negotiations  are  carried  on  all  day, 
and  adjourned  to  the  Fox  Building  at  850  Tenth  Avenue,  and 
continued  all  night  Here  is  a  story  with  a  human  touch ;  showing 
you  what  great  financiers  and  Wall  Street  lawyers  go  through, 
the  price  they  pay  for  their  large  incomes, 

259 


260     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"Alvin  Untermyer,  one  of  the  lawyers  for  the  Fox  companies, 
was  present.  Samuel  Untermyer,  who  at  this  time  resided  at 
the  Ambassador  Hotel,  was  asked  to  remain  at  the  hotel,  in  case 
his  son  had  any  questions  he  would  like  to  ask  him.  The  discus- 
sion during  the  night  was  what  charge  should  my  bankers  make 
for  the  loan  of  this  $6,000,000.  From  time  to  time  Alvin  would 
call  his  father  on  the  phone.  The  last  time  we  called  him  was 
about  4:30  a.  m.  At  the  conclusion  of  that  we  had  not  reached 
a  determination.  It  was  suggested  at  5  a.  m.  that  we  call  him 
again.  I  refused  to  have  him  called  again — we  had  annoyed  him 
sufficiently  during  the  night,  and  he  certainly  ought  to  be  allowed 
to  go  to  bed,  so  he  would  be  fit  the  next  day  to  carry  on  his  work 
in  the  behalf  of  my  companies.  The  next  day  at  8  o'clock  I 
called  at  the  Ambassador  Hotel,  and  proudly  stated  the  fact 
that  I  had  refused  to  have  him  called,  to  which  he  replied :  'You 
didn't  do  me  a  bit  of  a  favor.  Why  didn't  you  call  me  ?  If  you 
had,  we  could  have  settled  the  matter  then  and  I  could  have  gone 
to  bed  and  slept.  As  it  is,  I  have  not  slept  a  wink/  " 

So  now  we  can  understand  why  Samuel  Untermyer  suffers 
from  asthma,  and  has  to  come  out  to  Southern  California  to 
spend  his  winters!  Also,  we  can  understand  why  the  hearing 
before  Judge  Coleman  of  February  13,  1930,  opened  with  the 
following  dialogue: 

'The  Court :    What  have  you  to  report,  Mr.  Untermyer  ? 

"Mr.  Untermyer:  Just  a  moment,  your  Honor,  until  I  get 
up.  I  am  not  feeling  so  well — I  am  in  pretty  bad  shape  today." 

The  end  of  the  all-night  conference  was  that  the  Lehman 
group  agreed  to  lend  $6,000,000  for  forty-five  days  at  a  price  of 
$600,000.  Ten  per  cent  interest  for'  forty-five  days  is  .222  per 
cent  per  day,  and  if  you  multiply  that  by  365  days,  you  get  81 
per  cent  per  annum.  In  addition  to  that,  they  added  the  legal 
6  per  cent — of  course,  it  wouldn't  do  for  great  bankers  to  fail  to 
charge  the  legal  rate  of  6  per  cent  interest.  The  rest  of  the 
amount  was  a  fee,  or  a  premium,  or  bonus,  or  some  other  fancy 
thing,  having  nothing  to  do  with  interest. 

But  whatever  you  call  it,  it  was  87  per  cent  profit  on  the 
loan ;  and,  would  you  believe  it,  there  was  a  Wall  Street  financier 
to^whom  that  amount  seemed  insufficient!  None  other  than  our 
friend  Clarence  Dillon,  who  had  eaten  all  the  grapes  at  the 


A  JUDGE  IN  BUSINESS  261 

luncheon,  and  told  W.  F.  that  if  he  didn't  dissolve  his  voting 
shares,  his  companies  would  soon  be  in  charge  of  someone  who 
was  not  in  the  moving  picture  business.  W,  F.  says  that  he  had 
brought  Dillon  into  the  picture  in  order  to  find  out  what  was 
Dillon's  real  attitude.  And  now  he  found  out — when  Dillon's 
firm  would  not  "take  this  risk."  Says  W.  F. : 

"The  risk  involved  was  to  receive  for  collateral  the  stock 
that  we  paid  $20,000,000  for,  and  any  other  collateral  that  the 
company  may  have  had;  collateral  against  which  Dillon,  Read 
had  signed  a  commitment  to  sell  to  the  public  $65,000,000  worth 
of  securities.  It  doesn't  need  any  argument  as  to  why  Dillon, 
Read  didn't  want  to  go  along  with  this.  Dillon,  Read  had  instruc- 
tions, perhaps  from  the  Telephone  Company,  that  the  Gaumont 
property  should  be  sacrificed — that  was  one  of  the  ways  of 
destroying  the  Fox  companies.  So  the  $6,000,000  loan  was 
actually  made  by  Lehman  Brothers  and  Bancamerica-Blain 
When  the  new  financing  was  done,  the  bankers  on  or  before  the 
15th  received. back  their  $6,000,000,  and  made  their  profit  of 
87  per  cent  in  the  interim." 

Here  is  a  second  story  of  the  Lehman  group,  and  the  assist- 
ance they  gave  to  the  Fox  companies: 

"It  appears  that  my  enemies  weren't  just  satisfied  to  instruct 
the  banks  to  sue  and  get  a  judgment,  but  when  the  Public  Bank 
secured  its  judgment  for  $450,000,  they  gave  the  execution  of 
that  judgment  to  a  sheriff,  who  promptly  presented  himself  at 
the  Fox  Film  Corporation's  offices  and  took  possession  of  the 
entire  plant.  He  was  there  to  levy  on  the  apparatus,  the  machin- 
ery, everything  that  we  had,  so  as  to  be  sure  that  the  corporation 
could  not  function  any  longer.  These  people  who  were  planning 
our  destruction  were  annoyed  by  the  fact  that  after  they  had 
attached  the  cash  of  the  Fox  Film  Company,  of  every  bank 
account  in  New  York  as  well  as  every  bank  account  in  every 
country  in  the  world,  the  corporation  was  still  going  on  and 
doing  a  prosperous  business ;  the  receipts  from  its  American  busi- 
ness were  sufficient  to  take  care  of  all  its  current  operations. 
There  was  no  surplus  left  over,  of  course,  with  which  to  pay 
$450,000  judgments.  They  knew  that  the  surest  way  to  destroy 
the  earnings  was  to  publish  the  fact  that  a  sheriff  had  entered  the 
premises  and  attached  everything  that  his  eyes  surveyed. 


262     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"By  this  time  the  Bancamerica-Blair  group  were  in  the  pic- 
ture. I  asked  them  to  please  loan  the  company  the  money  to 
satisfy  this  judgment,  so  that  we  could  remove  the  sheriff  from 
the  premises ;  that  unless  that  was  done,  there  wasn't  any  financ- 
ing to  do.  It  was  finally  accomplished  by  my  giving  my  personal 
note — not  the  note  of  a  corporation,  but  my  own  note — to  the 
Bancamerica-Blair  group,  and  they  in  return  gave  me  the  neces- 
sary money  on  the  discount  of  my  note,  and  took  as  collateral 
the  judgment  that  the  court  had  rendered  against  the  company, 
and  in  that  way  we  paid  this  judgment  and  removed  the  sheriff." 

One  of  the  difficulties  standing  in  the  way  of  the  Lehman 
plan  was  the  action  which  the  Government  had  started  against 
W*  F.  and  his  companies,  requiring  them  to  divest  themselves  of 
the  Loew  shares.  Colonel  Huston  had  been  doing  his  best  in 
Washington  to  have  this  suit  discontinued,  using  the  argument 
that  the  only  alternative  was  the  throwing  of  the  company  into 
receivership  and  thus  risking  another  panic.  Says  W.  F. : 

"I  then  suggested  that  perhaps  the  Department  of  Justice 
would  see  its  way  clear  to  give  me  a  letter  that  I  could  exhibit 
to  my  bankers,  indicating  a  plan  that  would  be  agreeable  to  the 
Department  of  Justice,  and  stating  terms  under  which  these  com- 
panies would  be  permitted  to  merge.  Huston  asked  me  to  come 
to  Washington.  He  would  propose  my  suggestion  to  the  then 
Attorney-General,  Mr.  Mitchell. 

"The  day  I  left  for  Washington  I  informed  the  Lehman  bank- 
ers and  their  attorney,  Mr.  Swaine,  and  Swaine  offered  to  wager 
me  $10,000  or  more  that  I  was  going  to  Washington  on  a  fool's 
errand ;  he  was  familiar  with  the  policy  of  the  administration,  he 
had  tried  again  and  again  to  discuss  consolidations  and  mergers, 
and  the  administration  was  unwilling  to  discuss  them.  He  called 
my  attention  to  the  fact  that  promptly  after  taking  office,  Mitchell 
had  made  an  address  declaring  that  the  department  no  longer 
would  meet  with  heads  of  companies  to  discuss  mergers,  that  the 
companies  must  find  their  own  lawyers,  and  their  lawyers  knew 
what  was  legal  and  what  was  illegal.  In  this  public  address  he 
made  it  dear  that  the  department  intended  to  stand  by  that,  and 
if  these  mergers  were  legally  arranged,  there  would  be  no  inter- 
ference from  the  Government,  but  if  they  were  illegal,  the 
department  would  take  such  action  as  it  deemed  necessary. 


A  JUDGE  IN  BUSINESS  263 

"Oti  the  morning  I  was  leaving  for  Washington  I  had 
received  a  letter  from  Senator  Thomas  Walsh  of  Montana,  whom 
I  had  known,  expressing  his  regrets  for  the  difficulties  that  I 
found  myself  in,  and  as  this  letter  appeared  to  me,  it  was  ^  an 
invitation  for  me  to  come  to  Walsh  and  tell  him  what  my  diffi- 
culties were.  While  the  letter  didn't  directly  so  state,  I  con- 
strued it,  however,  as  an  invitation  to  call,  so  that  when  I  arrived 
in  Washington  to  meet  Huston,  I  showed  him  this  letter  from 
Walsh.  He  is  the  senator  who  carried  on  the  oil  investigation 
during  the  Harding  administration,  and  was  then  a  man  to  be 
reckoned  with;  he  was  powerful,  and  his  reputation  was  always 
for  the  under  dog.  Huston  asked  me  to  permit  him  to  please 
keep  the  letter  during  that  day.  Later  that  evening,  Huston,  all 
elated,  brought  me  a  letter  signed  by  Mitchell,  the  Attorney- 
General,  in  which  the  Attorney-General  outlined  the  plan  of  the 
method  that  could  be  employed  to  consolidate  the  Loew  and  the 
Fox  companies. 

"Huston's  statement  to  me  was  that  this  was  the  first  letter 
of  the  sort  that  Mitchell  had  written  from  the  day  that  he  had 
•taken  office;  that  it  was  contrary  to  the  policy  of  the  Department 
of  Justice  or  the  Attorney-General's  office  to  advise  any  corpora- 
tion of  what  method  to  employ  for  consolidation ;  that  an  excep- 
tion to  the  rule  had  been  made  in  this  emergency/' 

The  Lehman  plan  was  ready,  and  the  next  step  was  that  it 
should  be  submitted  to  the  stockholders  of  Fox  Film  and  Fox 
Theatres;  so  Judge  Coleman  directed  the  calling  of  a  meeting  on 
March  5.  Stuart  and  Otterson  were  now  concentrating  their 
efforts  upon  the  balking  of  the  Lehman  plan,  and  ^  part  of  their 
program  was  to  rush  forward  a  plan  of  their  own,  in  which  they 
offered  the  stockholders  better  terms.  Inasmuch  as  W.  F.  refused 
to  deal  with  them,  and  as  W.  F.'s  directors  refused  to  endorse 
the  plan  or  put  it  before  the  stockholders,  Halsey,  Stuart  &  Co. 
were  forced  to  offer  the  plan  directly  to  the  stockholders,  and 
they  set  out  to  collect  proxies  in  their  interest.  W.  F.'s  brother- 
in-law,  Jack  Leo,  also  began  a  campaign,  and  the  stockholders 
all  over  the  country  were  deluged  with  literature,  which  they 
must  have  found  puzzling,  because  of  the  diametrically  contra- 
dictory statements  contained. 

The  by-laws  of  the  companies  provided  that  new  financing 


264     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

must  be  approved  by  a  two-thirds  vote  of  the  stockholders,  and 
as  the  day  for  the  meeting  drew  near  it  became  evident  that  the 
decision  would  be  close.  W.  F.  came  to  the  meeting  with  a  total 
of  62  per  cent  of  the  proxies.  Halsey,  Stuart  had  about  7  per 
cent,  and  26  per  cent  were  in  the  hands  of  a  stockholders'  com- 
mittee which  had  been  organized  independently,  and  concerning 
whose  attitude  W.  F.  had  no  information.  The  remaining  5  per 
cent  of  the  stock  was  the  voting  shares  belonging  to  W.  F.,  and 
this  was  in  escrow  with  the  Bankers  Trust  Company,  held  in  the 
interest  of  the  trusteeship.  If  W.  F.  could  vote  these  shares, 
he  would  have  67  per  cent,  and  the  matter  would  be  settled.  As 
soon  as  he  realized  how  close  the  issue  was  to  be,  he  brought 
a  motion  before  the  Supreme  Court  of  New  York  State,  asking 
an  order  permitting  him  to  vote  his  shares  at  the  stockholders' 
meeting. 

This  was  accompanied  by  the  affidavit  he  had  prepared  in 
answering  the  complaint  of  Mrs.  Kuser,  and  he  added  many 
exhibits,  including  the  text  of  the  Lehman  plan,  and  financial 
statements  of  Fox  Film,  Fox  Theatres,  and  Loew's.  Stuart  and 
Otterson  came  back  with  an  answering  affidavit,  and  W.  F. 
made  a  replying  affidavit,  and  an  additional  replying  affidavit. 
Halsey,  Stuart  submitted  their  plan,  and  also  a  so-called  "stock- 
holders' plan.3'  The  whole  makes  a  sizable  book. 

I  have  studied  these  various  documents  carefully.  I  note  in 
them  a  number  of  direct  contradictions :  Fox  says  one  thing,  and 
Stuart  and  Otterson  say  the,  opposite,  and  it  could  not  have  been 
an  easy  matter  for  a  judge,  unfamiliar  with  the  case,  and  having 
only  a  brief  time  at  his  disposal,  to  distinguish  truth  from  false- 
hood. It  so  happens  that  my  eyes  have  been  trained  to  pick  out 
the  rascalities  of  big  business,  and  I  note  in  the  answering  affi- 
davit of  H.  L.  Stuart  and  John  E.  Otterson  a  subtle  piece  of 
fancy  work  which  I  will  point  out  to  you,  so  that  you  may 
understand  just  why  Wall  Street  lawyers  are  paid  retaining  fees 
of  one  or  two  hundred  thousand  dollars,  and  a  million  or  more 
when  the  case  is  won. 

At  the  hearings  before  Judge  Coleman,  Stuart,  represented 
by  his  attorney  Bogue,  and  Otterson,  represented  by  his  attorney 
Pratt,  had  pleaded  for  the  throwing  of  the  Fox  companies  into 
receivership.  These  hearings  had  been  of  two  kinds:  one  kind 


A  JUDGE  IN  BUSINESS  265 

in  open  court,  at  which  stenographers  were  present,  and  the  sec- 
ond kind  in  the  judge's  chambers,  of  which  no  record  was  made. 
At  both  kinds  of  hearings  Bogue,  representing  Stuart,  had 
pleaded  for  receivership;  but  Pratt,  representing  Otterson,  had 
not  directly  demanded  a  receivership  at  any  open  hearing;  all  that 
he  had  done  in  open  court  was  to  object  to  the  Lehman  plan. 
Perhaps  it  was  intentional  that  he  confined  his  advocacy  of 
receivership  to  Judge  Coleman's  private  chambers.  That  he  did 
there  argue  for  receivership  is  testified  to  in  an  affidavit  by; 
Alvin  Untermyer,  who  was  present 

The  time  comes  when  Stuart  and  Otterson  are  jointly  making 
an  affidavit  before  Judge  Levy  of  the  State  Supreme  Court.  It  is 
their  tactics  to  persuade  this  new  judge  that  they  have  not  ever 
asked  for  a  receivership,  but  that  the  blame  for  the  receivership 
danger  rests  entirely  upon  W.  F.  What  they,  Stuart  and  Otter- 
son,  are  doing  is  offering  a  better  plan  than  the  Lehman  plan, 
more  advantageous  to  the  stockholders ;  so  they  ask  Judge  Levy 
not  to  let  Fox  vote  his  shares  for  the  Lehman  plan,  but  to  let 
them  vote  Fox's  shares  for  their  plan.  Their  affidavit  is  a  joint 
one;  all  through  its  text  the  two  men  are  speaking  together  of 
their  common  actions  and  their  common  interests.  But  when , 
they  come  to  the  delicate  receivership  question,  there  is  a  deft 
switch  in  the  process :  the  defendant  Stuart  disappears  behind  the 
curtain,  leaving  the  defendant  Otterson  to  hold  the  stage  by  him- 
self. 

The  reason  for  that  is  clear  enough  to  eyes  which  have  been 
trained  to  the  arts  of  diplomacy.  The  defendant  Stuart  dares 
not  swear  that  he  did  not  urge  a  receivership,  because  he  knows 
there  is  a  record  of  the  open  hearings  before  Judge  Coleman. 
Therefore  the  defendant  Otterson  alone  takes  up  the  argument. 

And  now  let  us  see  what  his  argument  i§.  Otterson  quotes 
the  affidavit  which  he  made  in  the  proceedings  before  Judge 
Coleman,  as  follows: 

"It  is  essential,  in  my  opinion,  that  in  the  interest  of  stock- 
holders and  creditors  alike,  the  business  (of  Fox  Film  Corpora- 
tion) be  conserved  through  receivership  or  trusteeship  or  some 
other  form  of  conservation." 

The  defendant  Otterson  then  goes  on  to  explain  to  the  new 
judge  exactly  what  the  above  request  meant.  He  says : 


266     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"At  the  time  of  the  execution  of  said  affidavit  by  the  defend- 
ant Otterson,  no  plan  of  reorganization  of  the  Fox  companies 
had  even  been  suggested.  Mr.  Fox  had  refused  to  go  through 
with  the  trust  agreement  and  it  seemed  at  that  time  to  the  defend- 
ant Otterson  that,  in  the  absence  of  some  other  method  by 
which  the  assets  of  the  Fox  companies  could  be  preserved  for 
their  creditors  and  stockholders,  a  receivership  was  inevitable. 

"This  is  the  extent  to  which  the  defendant  Otterson  has  urged 
a  receivership.  He  does  not  favor  a  receivership,  if  the  same 
can  be  avoided,  and  is  not  defending  this  action  or  interposing 
the  counterclaim  herein  for  the  purpose  of  bringing  about  a 
receivership,  or  bringing  about  the  ruin  and  disruption  of  the 
Fox  companies,  but  on  the  contrary  is  anxious  that  said  com- 
panies shall  be  rehabilitated  and  successful,  to  the  end  that  the 
interests  of  creditors  and  stockholders  shall  be  properly  protected, 
including  the  interest  of  the  plaintiff  as  such  a  stockholder." 

So  you  see  the  dever  trick !  Judge  Levy  of  the  State  Supreme 
Court  will  read  that  statement,  and  will  entirely  miss  the  fact 
that  Stuart  is  saying  nothing,  and  will  get  the  impression  that 
the  two  men  are  not  now  urging  a  receivership,  but  are  urging 
the  Halsey,  Stuart  plan!  You  will  see  in  a  moment  the  judge 
actually  admitting  in  his  decision  that  he  had  not  had  time  to 
read  the  law  in  the  case ;  so  perhaps  it  will  escape  his  attention 
that  the  phrase  used  by  defendant  Otterson  "through  receiver- 
ship or  trusteeship  or  some  other  form  of  conservation/'  is  a  pure 
piece  of  verbiage.  There  is  no  "other  form  of  conservation" 
recognized  by  the  law,  and  a  receivership  is  the  only  possible  out- 
come of  the  action  which  the  defendant  Otterson  has  been  and, 
at  this  very  time  is  supporting  and  urging  before  Judge  Coleman 
of  the  United  States  District  Court! 

Let  me  give  you  one  more  example  of  what  Stuart  and  Otter- 
son  told  the  Supreme  Court  of  New  York  State.  They  told  how 
in  August  of  1929  the  Fox  had  foolishly  bought  the  Gaumont 
shares,  without  the  approval  of  Stuart  or  Otterson.  Under  oath 
they  stated:  "Not  until  in  or  about  the  month  of  November, 
1929,  did  either  of  these  defendants  learn  of  said  obligation  in 
connection  with  said  Gaumont  chain." 

I  asked  W.  F,  for  a  written  comment  on  this,  and  he  gave  me 
a  detailed  account  of  his  negotiations  with  Halsey,  Stuart  con- 


A  JUDGE  IN  BUSINESS  267 

cerning  the  Gaumont  deal  in  July  and  August  of  1929,  before 
the  purchase  was  made.   He  says : 

"This  matter  was  discussed  at  great  length  with  Mr.  Ernest 
Niver,  manager  of  the  New  York  branch  of  Halsey,  Stuart  & 
Co.,  with  whom  I  had  almost  daily  contact,  not  only  in  this  matter 
but  in  other  matters,  and  he  was  the  authorized  agent  at  all  times 
for  Halsey,  Stuart  &  Co.  It  was  he  who  sent  cables  about  this 
matter  to  Harry  Stuart  while  Stuart  was  in  London,  and  received 
replies  and  informed  me  of  them.  It  was  he  for  the  firm  of 
Halsey,  Stuart  &  Co.  who  urged  as  hard  as  he  knew  how  that 
the  acquisition  of  the  Gaumont  Company  be  made.  .  „  .  When 
Stuart  returned  from  abroad  and  called  on  me  again  in  August, 
as  he  says  he  did,  the  matter  of  the  Gaumont  acquisition  was 
fully  and  completely  discussed.  He  commented  on  the  cables  he 
received  and  sent,  and  inquired  whether  the  information  he  had 
transmitted  through  his  office  was  of  any  assistance  to  me." 

W.  F.  goes  on  to  inquire  what  would  have  been  the  chances 
of  the  London  bankers  lending  the  Fox  companies  $16,000,000, 
without  taking  the  trouble  to  consult  the  New  York  banker  of 
the  Fox  companies,  who  happened  then  to  be  in  London,  and 
who  happened  to  be  their  business  associate  and  personal  f  riend, 
W.  F.  invites  me  to  try  to  borrow  $16,000,000,  and  see  if  the 
bankers  do  not  investigate  my  financial  standing,  and  particularly 
if  they  do  not  consult  the  banks  with  which  I  am  regularly  doing 
business.  He  says: 

"You  will  please  bear  in  mind  that  neither  Fox  Theatres  nor 
Fox  Film  had  ever  before  borrowed  from  the  English  banks. 
It  did,  some  ten  years  ago,  take  a  mortgage  on  its  building  in 
London  for  approximately  $100,000,  but  had  since  paid  it  off. 
Here  was  the  first  time  that  Fox  Film  was  seeking  a  loan  in 
London  for  $16,000,000,  two  and  one-half  times  as  much  as  the 
total  amount  Fox  Film  owed  to  all  the  thirteen  banks  in  America. 
Is  it  possible  that  they  would  extend  that  kind  of  credit  without 
making  an  inquiry  of  our  bankers  here?  Is  that  the  usual  prac- 
tice of  a  bank  to  loan  a  firm  $16,000,000,  a  foreign  concern,  and 
make  no  inquiries  from  its  bankers,  as  to  whether  or  not  the 
company  is  worth  such  a  risk?" 

It  was  Bltimenthal  who  was  in  London,  negotiating  the  Gau- 
mont deal  as  a  representative  of  W*  F,  Blumenthal  went  to  see 


268     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

the  bankers,  and  can  we  believe  that  he  failed  to  tell  them  that 
Halsey,  Stuart  &  Company  was  the  concern  through  which  the 
Fox  companies  did  their  financing?  Is  it  then  thinkable  that  the 
London  banks  did  not  consult  Harry  Stuart,  and  make  the  fullest 
inquiries  of  him  as  to  the  standing  of  W.  F.  and  his  enterprises  ? 
One  of  the  men  who  advanced  the  money  was  Reginald  McKenna, 
and  I  have  previously  stated  that  this  great  banker  and  statesman 
was  intimate  with  both  Harry  Stuart  and  Harley  Clarke.  Here 
was  Harry  Stuart  in  London ;  and  we  are  invited  to  believe  that 
McKenna  loaned  £800,000  to  the  Fox  companies  without  taking 
the  trouble  to  call  Stuart  on  the  telephone  and  say:  "What  is 
your  opinion  of  those  companies  ?"  Common  sense  forces  us  to 
believe  that  such  a  loan  would  never  have  been  made  unless 
Harry  Stuart  had  replied :  "The  Fox  companies  are  our  clients ; 
we  have  sold  more  than  $30,000,000  worth  o£  their  bonds,  and 
their  position  is  excellent." 

Incidentally,  I  have  inspected  a  dozen  copies  of  the  motion 
picture  trade  papers,  the  "Exhibitors'  Daily  Review/'  "Motion 
Pictures  Today,"  and  the  "Film  Daily/'  which  reported  the 
details  of  the  Gaumont  deal  from  June  to  October  of  1929.  These 
papers  are  followed  closely  by  all  persons  who  trade  in  film 
stocks,  which  includes  the  clients,  employes,  and  members  of  the 
firm  of  Halsey,  Stuart  &  Company.  It  also  includes  Otterson, 
Bloom,  Gifford,  and  other  officials  of  the  Telephone  Company. 
Fox  was  at  this  time  their  heavy  creditor,  and  it  is  contrary  to 
common  sense  to  suppose  that  they  were  not  following  Fox 
affairs  thus  made  public. 

Such  were  the  statements  made  to  the  court  by  Stuart  and 
Otterson,  seeking  to  prove  that  William  Fox  was  unfit  to  vote 
his  shares  at  a  stockholders'  meeting.  In  seeking  a  judge  to  decide 
this  issue,  the  lawyers  representing  the  two  sides  went  hunting 
through  the  corridors  of  the  court  house.  Judge  McCook  disquali- 
fied himself  because  his  wife  owned  stock  in  the  Telephone  Com- 
pany. They  went  to  two  or  three  more,  and  finally  came  ta 
Judge  Aaron  J,  Levy,  who  agreed  to  hear  them  and  took  the 
papers  for  study.  His  decision  was  rendered  just  a  few  hours 
before  the  stockholders'  meeting,  and  is  a  most  curious  one.  Judge 
Levy  makes  the  statement:  "As  to  the  various  questions  of  a 
legal  nature  which  have  been  raised,  it  need  only  be  pointed  out 


A  JUDGE  IN  BUSINESS  269 

that  no  proper  opportunity  was  here  afforded  to  appropriately 
inquire  into  them  and  so  they  must  of  necessity  be  left  for  the 
trial  of  the  action."  Having  thus  admitted  that  he  is  not  able  to 
render  an  intelligent  decision,  he  proceeds  to  pass  judgment  upon 
the  moral  character  of  William  Fox. 

"It  is  said  that  of  little  acorns  great  oaks  do  grow.  Here  we 
have  a  little  $1,600  acorn  which  grew  into  a  sturdy  $300,000,000 
oak.  Why  was  not  well  enough  left  alone?  The  very  Fox 
chopped  down  this  healthy  thriving  tree  with  his  own  hatchet. 
The  world  knows  much  about  avarice  and  cupidity,  and  I  wonder 
if  this  is  not  another  illustration.  May  he  now  be  heard  to  com- 
plain? Has  he  placed  himself  in  that  position  which  justifies 
his  assault  upon  the  character  of  men?  I  think  not/' 

And  because  Justice  Levy  considers  that  "the  very  Fox"  is 
an  avaricious  Fox,  he  denies  him  the  right  to  vote  his  shares  at 
the  stockholders'  meeting,  and  rejects  with  contempt  his  claim 
to  be  "the  unfortunate  victim  of  a  malevolent  conspiracy  to  seize 
control  of  the  companies  from  him  for  the  iniquitous  purpose  of 
bestowing  it  upon  Halsey,  Stuart  &  Co.  or  Electrical  Research 
Products,  or  both." 

When  I  first  read  this  document,  I  said,  "This  is  not  a  legal 
decision,  but  a  venting  of  spite."  I  was  sure  there  must  be  a  story 
behind  it,  and  asked  W.  F.  The  first  detail  I  got  was  that  Levy 
is  an  intimate  friend  of  W.  R.  Sheehan.  The  second  detail  was 
that  Levy  is  an  active  Tammany  politician,  and  that  just  at  this 
time  Sheehan  gave  an  important  position  at  a  high  salary  to  a 
friend  of  Levy's,  another  Tammany  politician.  The  third  detail 
was :  "Three  months  later,  when  all  the  clouds  had  blown  away, 
we  were  advised  that  Judge  Levy's  brother,  Lloyd  Levy,  had 
received  a  position  with  Fox  Film  at  a  salary  of  $150  a  week. 
Harley  Clarke  had  brought  him  out  to  California  and  given  him 
this  position/* 

I  wanted  to  know  more  about  Levy,  so  I  wrote  to  a  lawyer 
friend  in  New  York,  who  replied: 

"In  1921  Aaron  J.  Levy  was  a  justice  of  the  Municipal  Court 
and  a  procedure  was  brought  to  remove  him.  By  law  justices 
are  forbidden  to  engage  in  any  other  business.  It  was  claimed 
that  he  did  engage  in  business,  that  of  ladies'  tailoring  and  dress- 
making, the  business  of  exhibiting  motion  picture  plays,  the  busi- 


270     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

ness  of  printing  and  publishing  a  newspaper  known  as  the 
'Wahrheit/  and  that  of  owning,  managing,  directing  and  con- 
trolling a  corporation,  H.  Milgrim  &  Brothers,  Inc.,  engaged  in 
ladies*  tailoring.  Judge  Levy  admitted  that  he  was  a  stockholder 
in  H.  Milgrim  &  Brothers,  Inc.,  and  that  he  spent  a  considerable 
part  of  his  time  at  the  office  of  the  corporation.  The  court  held 
that  the  term  'carry  on  a  business'  implies  such  a  relation  to  the 
business  as  identifies  the  person  with  it,  and  imposes  upon  him 
some  duty  or  responsibility  in  connection  with  its  management. 
The  court  found  there  was  no  evidence  that  Judge  Levy  actively 
engaged  in  the  conduct  of  the  business.  The  petition  was  there- 
fore dismissed.  The  case  is  reported  in  198  N.  Y,  Appellate 
Division,  326." 

1  read  this  letter  to  Benjamin  Reass,  and  he  made  a  sarcastic 
comment,  that  the  basis  of  Justice  Levy's  acquittal  was  that  he 
didn't  try  the  dresses  on  the  customers  of  Milgrim  Brothers. 
W.  F.  had  something  to  contribute  to  this  story  of  the  Milgrim 
concern,  as  follows: 

"During"  an  intermission  of  the  stockholders'  meeting,  one  of 
the  employes  of  Fox  Film,  William  Brandt,  asked  to  see  me 
privately,  and  told  me  that  Levy  had  just  rendered  a  decision 
forbidding  me  to  vote  my  shares  at  the  meeting.  Brandt  then 
told  me  of  Levy's  connection  with  the  Milgrims>  and  added  that 
Mrs.  Milgrim's  brother  had  a  chain  of  theatres  which,  he  had 
recently  been  engaged  in  selling  to  the  Fox  Metropolitan  Com- 
pany. Tbe  price  was  to  be  determined  upon  the  basis  of  ten  times 
the  animal  income,  and  the  legal  or  accounting  department  of  the 
Fox  company  discovered  that  there  had  been  misrepresentations 
made  witli  respect  to  the  figures.  So  the  Fox  company  refused 
to  go  on  with  the  purchase,  unless  there  was  a  re-accounting. 
Judge  Levy  then  came  to  see  William  Brandt  in  connection  with 
the  matter.  He  notified  Brandt  to  tell  me  that  he,  Levy,  was 
interested  in  that  theatre,  and  had  money  invested  in  it,  and 
wanted  the  thing  to  go  through.  The  matter  was  not  taken  to 
me,  and  the  deal  did  not  go  through/' 

Judge  Levy  gets  into  trouble  frequently,  it  appears.  I  find 
that  early  in  1931  former  Supreme  Court  Justice  William  N. 
Cohen,  chairman  of  the  Committee  on  Courts  of  the  Bar  Asso- 
ciation, addressed  to  the  president  of  the  associatioE  a  letter 


A  JUDGE  IN  BUSINESS  271 

reciting  two  charges  against  Judge  Aaron  J.  Levy.  If  appears 
that  Levy  had  heard  two  cases  against  the  Bank  of  the  United 
States,  and  had  decided  one  case  in  the  bank's  favor,  and  had  the 
other  before  him,  when  the  Brooklyn  "Daily  Eagle"  published 
the  fact  that  Levy  was  a  borrower  from  the  bank,  owing  it  the 
sum  of  $143,015.92,  upon  a  loan  secured  by  stocks  worth  on 
the  market  only  $40,000,  After  this  exposure  Levy  decided,  "for 
certain  reasons/'  not  to  go  on  with  the  case. 


19 


REEL  TWENTY-THREE 
THE  STOCKHOLDERS  MEET 

WE  are  now  to  hear  about  the  critical  stockholders'  meeting 
of  March  5,  1930.  Before  discussing  it,  we  should  know 
something  about  the  previous  meetings  of  Fox  stockholders,  since 
the  first  one  in  1916.  Says  W.  F. : 

"There  were  fourteen  annual  meetings  of  the  Fox  Film  Cor- 
poration, and  there  was  present  at  each  of  these  fourteen 
meetings,  other  than  the  officials  of  the  company,  one  lone 
stockholder.  He  was  a  doctor,  and  lived  in  Newark,  N.  J.  He 
considered  himself,  and  so  did  I,  as  the  mascot  stockholder  of 
Fox  Film. 

"At  every  annual  meeting  we  were  prepared  for  the  ceremo- 
nies, and  provided  a  large  room  where  many  people  could  gather, 
and  after  waiting  for  the  time  to  come  for  the  meeting  to  open, 
this  little  doctor  would  walk  in,  this  lone  stockholder.  He  was  one 
of  the  original  stockholders  when  the  company  was  formed,  and 
I  presume  being  a  doctor  by  profession  he  had  spare  time  so 
that  he  could  come  to  these  meetings.  The  value  of  his  holdings 
had  jumped  so  between  the  first  annual  meeting  and  the  second 
one  that  he  perhaps  came  the  second  time  to  express  his  appre- 
ciation, and  then  each  year  the  earnings  grew  and  the  value  of 
his  holdings  became  larger.  When  1929  arrived,  he  had  a  sub- 
stantial fortune  in  the  value  of  the  shares  that  he  received  as  a 
bonus  at  the  meeting  of  1915. 

**I  knew  him  and  learned  to  like  him.  He  is  a  most  charming 
little  man,  not  more  than  5  feet  high.  The  number  of  shares 
he  had  was  very  small,  but  he  would  go  through  all  the  formal- 
ities proper  to  a  stockholder.  We  usually  had  the  proxies  of 
the  other  shares;  they  would  be  given  to  one  of  the  officials  of 
the  company,  and  this  little  doctor  would  be  one  of  the  tellers. 
He  would  count  the  votes  and  he  would  count  the  proxies  plus, 

272 


THE  STOCKHOLDERS  MEET  273 

his  vote.    We  usually  had  a  very  fine  meeting,  and  occasionally 
had  lunch  together  before  the  meeting. 

"When  the  doctor  attended  the  first  meeting  of  the  Fox  Film 
Corporation  on  February  1,  1916,  the  company  was  a  private 
company.  Its  securities  were  not  listed  on  any  stock  exchange, 
William  Fox  owned  50  per  cent  of  all  of  the  outstanding  stock, 
and  the  other  50  per  cent  was  owned  by  a  group  of  some  fifty 
stockholders,  one  of  which  was  the  little  doctor.  The  annual 
meetings  from  then  until  May,  1925,  at  which  the  little  doctor 
attended  each  meeting,  the  stockholders  were  still  not  more  than 
fifty;  it  was  in  1925  that  Fox  Film  had  its  stock  listed  on  the 
New  York  Stock  Exchange,  and  offered  some  of  the  shares  to 
the  public.  At  the  meeting  of  February,  1926,  our  stockholders 
were  perhaps  2,000;  but  when  the  stockholders'  meeting  was 
held,  the  only  one  of  the  2,000  who  attended  was  our  little 
doctor.  In  1927  we  perhaps  had  more  than  3,000,  but  when  the 
meeting  took  place,  the  only  stockholder  that  attended  was  the 
little  doctor.  At  the  meeting  of  1928  we  perhaps  had  more  than 
4,000  stockholders,  but  when  that  meeting  was  held  the  only 
stockholder  who  was  present  was  the  little  doctor.  When  the 
meeting  of  February,  1929,  came,  I  did  not  attend,  because  I  was 
then  busily  engaged  with  Bill  Donovan,  trying  to  secure  his  con- 
sent to  the  acquisition  of  the  400,000  shares  of  Loew  stock. 
I  was  informed,  however,  that  the  annual  meeting  was  conducted, 
and  although  the  number  of  Fox  Film  shareholders  at  that  time 
was  more  than  7,500,  the  only  stockholder  who  was  present  was 
the  little  doctor/' 

But  now  came  the  meeting  of  March  5,  1930,  a  great  contest 
featured  in  the  newspapers,  and  a  crowd  of  people  attended.  On 
the  top  floor  of  the  Fox  Building  are  two  spacious  rooms,  one 
100X175  and  the  other  100X125.  Many  thousands  of  people 
came  crowding  to  these  rooms.  Says  W.  F. :  "Not  so  many  stock- 
holders as  there  were  agitators  representing  the  Telephone  Com- 
pany, whose  job  it  was  to  hooray  everything  the  Telephone 
Company  wanted  and  shout  down  everything  that  Fox  wanted." 

"This  wasn't  to  be  the  kind  of  a  stockholders'  meeting  where 
one  person  living  in  the  state  of  New  York  and  forty-nine  living 
in  Newark,  N.  J.,  would  cause  their  votes  to  be  cast  to  elect 
directors  for  the  ensuing  year.  This  was  a  stockholders'  meet- 


274     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

ing  intended  for  the  purpose  of  approving  the  plan  of  refinancing 
proposed  by  Bancamerica-Blair,  Lehman  Brothers  and  Dillon, 
Read  &  Co.  The  purpose  of  Otterson  and  Stuart  in  attending 
this  meeting  was  to  prevent  the  stockholders  from  approving  a 
plan  that  would  avoid  these  companies  being  thrown  into  receiver- 
ship. The  purpose  of  Otterson,  Stuart,  the  lawyers,  and  the 
'plants'  attending  this  meeting  was  to  make  impossible  the  Fox 
Film  Corporation  repaying  to  them  the  money  that  it  owed  them 
— $15,000,000  to  the  Telephone  Company  plus  interest  past  due, 
and  $12,000,000  declared  due  by  Halsey,  Stuart  in  January, 
although  not  actually  due  until  April  1,  1930. 

"The  one  spark  of  human  kindness  that  I  could  find  at  this 
stockholders'  meeting  was  when  my  eyes  became  riveted  on  the 
face  of  that  little  doctor !  But  at  this  meeting  the  doctor  wasn't 
going  to  be  the  teller.  This  meeting  required  ten  tellers.  This 
wasn't  the  meeting  where  the  doctor,  being  appointed  the  teller, 
would  drop  his  one  vote  into  the  hat,  and  find  every  other  vote 
in  accord,  and  declare  the  vote.  This  was  to  be  a  meeting  where 
it  would  take  ten  men,  and  did  take  ten  men  the  greater  part  of 
the  day  to  examine  all  of  the  proxies  and  to  certify  under  -oath 
that  they  had  examined  the  proxies,  in  the  manner  in  which  the 
stockholders  had  voted.  This  was  a  new  sensation,  this  meeting. 

"There  were  some  nice  people  there  who  were  stockholders 
and  came  to  the  meeting.  There  were  ladies  and  gentlemen  who 
were  honestly  stockholders  of  the  companies,  and  who  came  to 
hear  the  fate  of  the  companies  in  which  they  had  invested  their 
hard-earned  savings.  There  were  pathetic  old  ladies  and  some 
young  ones  who  had  their  savings  invested  in  the  enterprise  cre- 
ated by  William  Fox,  and  who  had  invested  their  hard-earned 
dollars  because  of  William  Fox.  There  were  men  in  the  audience 
who  had  the  greater  part  of  their  fortunes  invested  in  the  enter- 
prise. The  room  was  packed  to  suffocation,  and  the  number  who 
actually  were  stockholders  in  my  opinion  were  less  than  5  per 
cent  of  those  who  were  in  the  room. 

"Amongst  those  who  attended  the  meeting  were  Winfield  R. 
Sheehan,  James  Grainger,  Clayton  Sheehan,  and  Courtland  Smith 
— all  actively  engaged  in  mingling  with  the  stockholders,  urging 
them  to  give  their  proxies  to  Halsey,  Stuart.  In  one  case  that 
comes  to  my  mind  a  stockholder  whose  name  was  Madden,  a 


THE  STOCKHOLDERS  MEET  275 

professional  bookmaker  at  race  tracks,  had  brought  his  proxy 
already  made  out  to  the  order  of  William  Fox.  When  the  proxies 
were  later  examined,  the  name  of  Fox  was  crossed  out,  and  I 
was  told  that  Winfield  R.  Sheehan  had  met  Madden  in  the  meet- 
ing room  and  had  him  change  his  proxy  from  Fox  to  Stuart. 
Other  changes  were  made  in  the  meeting,  not  quite  as  clumsy  as 
that ;  the  proxy  they  had  was  destroyed  and  a  new  proxy  offered 
them  for  signature. 

"The  group  that  I  controlled,  and  that  was  seeking  proxies  in 
my  behalf,  was  the  group  headed  by  Jack  G.  Leo.  Leo  knew 
before  the  meeting  opened  the  exact  number  of  proxies  I  had, 
and  the  number  that  he  had  obtained  totalled  less  than  the  two- 
thirds  required.  The  shares  necessary  to  make  up  the  difference 
lay  in  the  50,100  shares  of  stock  that  I  had  deposited  with  my 
trustees  at  the  Bankers'  Trust  Company.  Every  one  of  my  attor- 
neys felt  confident  that  the  decision  of  Judge  Levy  would  be  in 
my  favor,  and  that  his  injunction  would  restrain  the  Telephone 
Company  from  voting  my  shares,  and  that  the  Court  would  order 
that  the  shares  be  given  to  me  so  that  I  could  vote  them.  Had 
Judge  Levy's  opinion  been  that  way,  our  troubles  would  have 
been  over.  But  within  fifteen  or  twenty  minutes  before  the  meet- 
ing really  opened,  Richard  Dwight  of  the  firm  of  Hughes,  Schur- 
man  &  Dwight,  proudly  announced  that  he  had  just  been  informed 
that  Judge  Levy  had  rendered  a  decision  leaving  the  shares  that 
belonged  to  me  with  the  Bankers'  Trust,  and  that  Halsey,  Stuart 
and  the  Telephone  Company  intended  to  vote  my  shares  against 
my  plan  to  save  our  companies,  and  to  prevent  our  companies 
from  paying  them  the  $27,000,000  plus  interest  that  we  owed 
them. 

"It  was  in  that  frame  of  mind  that  I  sat  down  to  open  this 
meeting.  You  must  picture  me  on  October  28th  as  a  man  weigh- 
ing 182  pounds,  and  on  March  5th  sitting  down  at  this  meeting 
weighing  less  than  150.  You  must  picture  my  appearance  by 
the  fact  that  I  had  had  no  new  clothes  made  between  the  time 
I  weighed  182  and  the  time  I  weighed  less  than  150  pounds,  a 
brief  four  months  thereafter.  You  must  picture  me  when  I 
weighed  182  pounds  as  a  man  robust  and  healthy,  as  against  the 
man  haggard  and  tired  and  worn,  with  not  enough  vitality  left 
to  assert  himself  and  his  rights — but  rather  happy  and  glad  that 


276     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

he  was  still  alive,  and  wondering  whether  he  would  be  able  to 
finish  it  out;  whether  he  would  be  able  to  complete  the  job  before 
his  widow  and  orphans  would  hear  the  Rabbi  say :  "And  here  in 
this  coffin  lies  William  Fox.  He  wasn't  a  bad  man.  He  lived  a 
righteous  life/ 

"The  controlling  votes,  26  per  cent  of  the  outstanding  shares, 
were  in  the  hands  of  the  stockholders'  committee.  They  were 
represented  and  sat  at  the  table.  I  tried  my  level  best  to  discover 
how  this  26  per  cent  would  vote.  One-half  hour  before  the  time 
for  the  opening  of  the  meeting,  Mr.  Untermyer  stated  that  it 
would  be  necessary  to  gather  the  directors  together  in  the  direc- 
tors' room  of  the  Fox  Film  Corporation.  We  did.  Winfield  R. 
Sheehan  was  there — the  same  man  whom  I  had  picked  up  some 
time  in  1912  or  1913,  and  had  rescued  from  the  murder  charge 
they  were  making  against  him  as  secretary  to  the  Police  Com- 
missioner, and  had  offered  to  spend  $1,000,000  of  my  money 
to  protect  him  against  the  charges  they  were  making  against 
him. 

"Another  director  was  Saul  E.  Rogers,  my  personal  attorney 
and  counsel  for  twenty-five  years,  to  whom  in  August,  1929,  I 
had  given  a  contract  for  a  five-year  employment  at  $156,000  per 
annum.  He  took  the  leading  oar,  and  said  that  they  had  in  their 
pocket  a  plan  of  refinancing  submitted  to  them  by  Halsey,  Stuart 
&  Co.;  that  they  were  desirous  of  presenting  this  plan  at  the 
stockholders1  meeting,  and  therefore  would  like  to  have  the  board 
of  directors  consent  to  the  plan  offered  by  Halsey,  Stuart  &  Co., 
so  that  it  could  be  presented  to  the  stockholders.  This  was  the 
first  time  that  I  had  officially  heard  that  Halsey,  Stuart  had  a 
plan  and  really  were  willing  to  finance  these  companies. 

"Of  course,  it  goes  without  saying  that  the  majority  of  the 
board  of  directors  declined  to  entertain  any  plan  of  financing  by 
Halsey,  Stuart.  The  majority  of  the  board  of  directors  of  Fox 
Film  viewed  this  as  just  one  more  trick  on  the  part  of  the  Tele- 
phone Company.  The  majority  of  the  board  felt  that  even  if  it 
wanted  to  abandon  the  Lehman  plan  and  accept  the  Halsey, 
Stuart  plan,  when  the  showdown  came  there  would  be  a  reason 
found  why  Halsey,  Stuart  could  not  undertake  this  obligation, . 
and  that  the  purpose  of  proposing  the  Halsey,  Stuart  plan  was 
to  destroy  the  relationship  between  the  Fox  companies  and  the 


THE  STOCKHOLDERS  MEET  277 

group  of  bankers  who  seemed  to  indicate  a  strong  desire  to  do 
this  financing.  If  the  Fox  directors  would  lend  their  ears  to  the 
Halsey,  Stuart  plan,  and  if  the  directors  approved  and  the  stock- 
holders took  that  plan,  in  place  of  the  Lehman  plan,  then  the 
Bancamerica  group  would  have  received  1%  per  cent  of  the 
$65,000,000,  or  about  $1,000,000  for  the  services  they  had  ren- 
dered, and  they  would  be  out  of  the  picture. 

"Our  board  of  directors'  meeting  adjourned  without  giving 
consideration  to  the  Telephone  Company-Halsey,  Stuart  plan,  and 
we  went  to  the  floor  above,  where  the  annual  meeting  of  the 
stockholders  of  the  Fox  Film  Corporation  was  to  take  place.  It 
was  during  this  intermission  that  William  Brandt  asked  to  see 
me  privately,  to  tell  me  about  Judge  Levy. 

"Well,  here  I  was,  my  whole  career  lying  in  the  hands  of  this 
stockholders'  committee,  which  had  the  balance  of  the  votes.  I 
don't  know  how  this  committee  came  into  being.  These  stock- 
holders' committees  spring  from  nowhere.  If  they  cast  their 
votes  for  the  Halsey,  Stuart  plan,  then  the  stockholders  were 
without  financing,  for  the  Halsey,  Stuart  plan  could  not  be  con- 
sidered by  the  court,  unless  it  was  first  approved  by  the  board 
of  directors,  and  the  board  of  directors,  previous  to  the  opening 
of  the  meeting,  had  refused  to  do  this.  *""  '  -  , 

"You  will  recall  my  telling  you  that  the  attorneys  who  brought , 
these  suits  against  the  Fox  companies,  all  those  who  were 
demanding  and  crying  for  receiverships,  were  actually  paid  out 
of  the  funds  of  the  Fox  companies.  All  these  attorneys  were 
now  present  at  this  meeting,  representing  the  Telephone  Com- 
pany, Halsey,  Stuart,  and  Harley  Clarke.  In  reading  the  min- 
utes, bear  in  mind  that  all  of  the  questions  asked  and  answered 
were  asked  and  answered  by  lawyers  who  were  paid  by  the 
wreckers  of  the  companies.  I  don't  believe  you  will  find  a  single 
lawyer  that  asked  a  single  question  at  that  meeting  who  didn't, 
after  I  sold  out,  receive  a  check  in  payment  for  services  rendered 
out  of  the  funds  of  these  companies." 

I  have  before  me  the  minutes  of  the  stockholders*  meeting, 
some  50,000  words  of  text.  Human  nature  is  always  interested 
in  a  fight,  and  I  derive  amusement  from  this  conflict  of  gladia- 
tors. You  may  remember  Martin  Conboy,  whom  we  saw  appeal- 
ing to  Judge  Coleman  for  a  receivership.  Conboy  is  a  graduate 


278     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

of  a  Catholic  college  and  a  Knight  Commander  of  the  Order  of 
St.  Gregory  the  Great — I  believe  you  kiss  the  Pope's  toe  for  that. 
He  was  a  captain  in  the  New  Jersey  National  Guard,  and  counsel 
to  the  Judiciary  Committee  of  the  New  York  State  Assembly 
which  kicked  out  the  Socialist  assemblymen  during  the  war.  He 
is  a  Tammany  politician,  and  what  is  known  as  a  "silver-tongued 
orator";  soft-spoken,  polite,  always  smiling,  apologizing  for  the 
deadliest  blow.  All  through  this  meeting  we  find  Conboy  spar- 
ring with  Samuel  Untermyer.  Throughout  the  fight  they  never 
forget  that  they  are  members  of  a  privileged  caste;  they  never 
fail  to  greet  each  other  before  they  fire,  and  when  their  volleys 
have  been  delivered,  they  pay  each  other  jovial  compliments  upon 
their  accuracy  of  aim.  "  'Am  I  right  about  this,  Mr.  Conboy  ?' 
says  Untermyer. 

"Mr.  Conboy:  Not  entirely,  Mr.  Untermyer.  You  are  par- 
tially right  and  you  are  partially  wrong. 

"Mr.  Untermyer:    That  is  what  most  of  us  lawyers  are. 

"Mr.  Conboy:  Well,  you  are  right  most  of  the  time,  you 
know. 

"Mn  Untermyer:    Thank  you.    So  are  you,  Mr.  Conboy. 

"Mr.  Conboy:  Thank  you,  sir.  You  blow  my  horn  and  I 
will  blow  yours. 

"Mr.  Untermyer:  Well,  you  are  getting  ready  to  blow  an- 
other horn. 

"Mr.  Conboy:  And  you  are  getting  ready  to  blow  yours, 
too/' 

Pretty  soon  arose  Mr.  Berenson  from  Boston,  and  made  a 
long  and  bitter  speech,  full  of  attacks  upon  the  Lehman  plan  and 
upon  William  Fox.  He  refused  to  permit  his  time  to  be  limited. 
He  stated  that  he  wanted  a  receivership,  and  from  that  time  he 
lost  out  with  the  stockholders.  "  'I  say  that  tinder  such  circum- 
stances as  that  it  is  better  for  every  stockholder  in  the  corporation 
to  stand  behind  the  petition  for  the  appointment  of  a  receiver 
under  the  guidance  of  the  United  States  Court/ 

"(Hisses  and  cries  of  'No,  No/) 

"Mr.  Berenson:    Wait  one  second — 

"(Renewed  hisses  and  cries  of  'No/    'Choke/    'Sit  down.') 

"President  Fox :  Now  will  you  please  sit  down,  Mr.  Beren- 
son. You  are  out  of  order. 


THE  STOCKHOLDERS  MEET  279 

"Mr.  Berenson:  I  am  not  out  of  order.  I  decline  to  sit 
down.  I  am  going  to  be  heard.  There  are  stockholders  here  that 
want  to  hear  me. 

"Mr.  Untermyer :    No,  there  are  not 

"(Cries  of  'No/    'Sit  down/) 

"President  Fox:  Mr.  Berenson,  just  a  moment.  Is  there 
anybody  in  the  room  who  wants  to  hear  Mr.  Berenson  further  ? 

"(Cries  of  'No,  put  him  out/) 

"A  Voice:    Who  ever  heard  of  him  before  this? 

"Another  Voice :  He  has  been  on  the  first  page  of  the  New 
York  'Times/ 

"President  Fox :    Won't  you  please,  Mr.  Berenson,  sit  down  ? 

"Mr.  Berenson :    I  will  not  sit  down.    I  am  going  to  be  heard. 

"(Cries  of  'Put  him  out/     'Sit  down/) 

"A  Voice :    The  man  has  a  legal  right.    Let  him  say  it. 

"President  Fox:  Mr.  Berenson  is  your  man,  gentlemen. 
(Laughter.)" 

This  went  on  for  several  minutes.  Berenson  demanded  seven 
minutes  more  and  got  them.  Finally  he  subsided  and  Conboy 
arose  and  stated  his  objections  in  detail.  He  put  in  a  jovial  word 
for  Berenson : 

"It  has  been  stated  by  poor  Mr.  Berenson — he  got  an  awful 
razzing  because  he  just  mentioned  receivership  cursorily,  and 
everybody  hissed  him,  and  I  thought  for  a  time  they  were  going 
to  tear  him  apart — 

"A  Voice :    You  seem  to  like  him. 

"Mr.  Conboy:  Well,  I  am  not  an  enemy  of  his.  I  like  you 
too,  from  your  appearance  from  here. 

"Mr.  Untermyer:  But,  Mr.  Conboy,  you  ought  to  have  a 
great  deal  of  sympathy  with  Mr.  Berenson,  because  you,  too, 
asked  for  a  receivership. 

"Mr.  Conboy:  There  is  not  any  question  of  sympathy.  I  did 
not  ask  for  a  receiver. 

"Mr.  Untermyer :    You  did. 

"Mr.  Conboy :  I  told  the  court  there  were  worse  things  than 
a  receiver.  Don't  interrupt  me  with  statements  of  that  kind.  You 
know  that  is  not  quite  an  answer  to  what  I  am  saying.  We  are 
talking  about  receivers  for  a  minute. 

"Mr.  Berenson :    He  wants  to  razz  you,  too. 


280     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"Mr.  Conboy:  God  bless  my  soul,  you  talked  for  quite  a 
while,  and  I  thought  you  were  going  to  talk  so  long  that  Mr, 
Untermyer  would  not  let  me  talk  at  all,  he  charged  your  con- 
sumption of  time  up  to  me. 

"Mr.  Untermyer:    No,  I  didn't. 

"Mr.  Conboy:    I  knew  you  wouldn't." 

All  so  jolly  and  friendly,  you  see.  A  minute  or  two  later 
Conboy  is  saying:  ".  .  .  when  he  went  into  court  last  week 
3vith  Mr.  Untermyer  as  his  counsel — and  he  could  not  get  a  more 
astute  or  better  counsel  in  the  City  of  New  York,  or  any  place 
else  than  you,  Mr.  Untermyer — (Applause)  we  all  know  you  to 
be  as  formidable,  if  not  the  most  formidable  man  who  goes  into 
a  court  room — I  pay  you  the  compliment  without  hesitation — 

"Mr.  Untermyer :    But  that  is  taking  your  time,  Mr.  Conboy. 

"Mr.  Conboy:  I  will  give  more  time  to  it,  if  necessary,  to 
make  the  statement." 

There  arose  the  counsel  for  the  stockholders'  committee: 
Emory  R.  Buckner,  formerly  assistant  district  attorney  of  New 
York  County.  He  was  that  Buckner  whom  we  saw  acting  as 
counsel  for  the  police  investigation  in  1912  and  1913,  before 
whom  Winfield  R.  Sheehan  had  been  haled  and  accused  of  tak- 
ing graft,  Buckner,  you  may  remember,  invited  Sheehan  to 
waive  his  immunity,  and  Sheehan  pretended  not  to  understand 
what  he  meant,  and  Buckner  called  that  "bunk."  Now  he  repre- 
sents the  Stern  committee,  which  controls  26  per  cent  of  the  out- 
standing stock  and  has  the  decisive  vote.  W.  F.  has  had  no  hint 
as  to  what  will  be  Buckner's  attitude,  and  he  described  to  me  with 
dry  humor  his  varying  emotions  while  Buckner  was  making  his 
speech.  It  was  a  case  of  "off  again,  on  again,  Finnegan." 

Said  Buckner :  "  'In  that  letter  the  Stern  committee  said  that 
up  to  the  present  time  as  it  was  writing  these  letters  the 
Bancamerica-Blair  (Lehman)  plan  seemed  to  be  the  only  prac- 
ticable plan  or  best  plan,  because  of  the  necessary  co-operation 
of  the  Fox  directors  and  of  Mr.  Fox  personally/"  At  that 
moment  the  hopes  of  W.  F.  went  high.  But  then  a  moment  later 
they  sank  again.  "The  committee  said,  however,  and  has 
reserved  its  right  to  use  its  influence  for  the  adoption  of  any 
plan  which  is  the  best  plan,  but  always  to  avoid  a  receivership. 
(Applause.)'"  Then  they  went  up  again.  "'There  may  be 


THE  STOCKHOLDERS  MEET  281 

those  who  have  Mr.  Berenson's  fancy  for  a  receivership,  but  I 
think  that  stockholders  are  ill  advised  if  anything  they  can  do 
to  prevent  a  receivership  is  left  undone.  Because  we  lawyers 
know,  even  if  you  have  not  had  experience,  that  in  a  receiver- 
ship it  is  mostly  the  lawyers  and  the  trustees  and  new  bankers 
or  new  organizing  gentlemen  that  come  around  that  do  nearly 
all  the  receiving,  and  the  common  stock  is  generally  wiped  out 
in  order  to  make  a  reorganization  more  practicable/  " 

Buckner  read  the  correspondence  with  Fox  and  with  the 
directors  of  Fox  Film,  in  which  they  stated  that  they  were  con- 
vinced that  the  Halsey,  Stuart  plan  was  not  made  in  good  faith, 
and  that  they  would  have  nothing  to  do  with  it.  Buckner  said 
that  his  committee  had  no  interest  in  the  quarrel  and  no  knowledge 
as  to  what  had  happened;  their  only  concern  was  to  find  a  way 
to  save  the  companies.  In  the  end  he  came  out  with  the  announce- 
ment that  the  committee  would  cast  its  votes  for  the  Lehman  plan. 

Now  arose  Richard  Dwight,  member  of  the  firm  of  Hughes, 
Schurman  &  Dwight,  representing  the  trustees  of  the  voting  trust, 
or  rather  a  majority  of  them,  Stuart  and  Otterson.  You  will 
recall  the  strange  circumstances  whereby  Dwight  was  employed 
by  W.  F.,  and  then  authorized  to  represent  the  trusteeship,  which 
made  him  the  opponent  of  W.  F.  from  that  time  forward.  Here 
Dwight  addressed  the  stockholders,  and  told  them  he  assumed 
that  he  was  acting  "at  Mr.  Fox's  request."  There  came  a  passage 
at  arms  between  Untermyer  and  Dwight,  in  which  you  will  once 
more  hear  two  eminent  and  high-priced  lawyers  accusing  each 
other  of  lying. 

"Mr.  Untermyer:  I  am  afraid  Mr.  Dwight  is  just  a  trifle 
disingenuous.  He  says  Mr.  Fox  is  one  of  the  trustees,  but  the 
trustee  agreement  says  that  the  two  other  trustees  can  vote  with- 
out him,  so  that  he  is  in  a  peculiar  position. 

"Mr.  Dwight :  It  says  nothing  about  that  in  the  voting  trust 
agreement. 

"Mr.  Untermyer:  It  does  say  that  any  two  or  a  majority 
can  act." 

"Mr.  Dwight :   Not  the  voting  trust  agreement. 

"Mr.  Untermyer:  Yes,  and  so  much  so  that  this  Halsey, 
Stuart  plan  which  has  the  approval  of  the  trustees  and  is  really 
made  by  the  trustees  was  considered  and  put  out  in  your  office. 


282      UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"Mr,  Dwight:  That  is  correct 

"Mr.  Untermyer:  Yes,  without  even  letting  Mr.  Fox  know. 
So  he  is  a  funny  kind  of  a  one  trustee,  isn't  he?  (Laughter.)" 

Here  again,  fortunately,  we  frave  the  means  of  pinning  down 
the  issue,  and  seeing  whether  it  is  the  Fox  or  his  opponents  who 
tell  the  truth.  It  is  embarrassing  to  me  to  have  to  state  that  a 
graduate  of  Princeton  University  and  the  New  York  Law 
School,  a  law  partner  of  the  Chief  Justice  of  the  United  States 
Supreme  Court,  made  a  false  statement  to  the  stockholders  of 
Fox  Film  Corporation ;  but  it  happened  to  be  false,  and  common 
sense  compels  us  to  assume  that  it  was  deliberately  so.  Three 
months  ago  Richard  Dwight  had  helped  in  the  drafting  of  that 
voting  trust  agreement;  it  had  been  prepared  by  his  firm,  as  a 
result  of  the  solemn  promise  of  Charles  Evans  Hughes  to  sup- 
port W.  F.  and  help  him  out  of  his  troubles,  and  prepare  the 
agreement  in  such  a  way  that  his  trust  could  not  be  abused.  For 
three  months  Mr.  Dwight  had  been  carrying  on  a  long  and  hard- 
fought  contest  over  that  voting  trust  agreement.  For  six  weeks 
he  had  been  discussing  before  Judge  Colemati  the  carrying  out 
of  the  agreement,  and  explaining  its  provisions  to  the  judge,  both 
in  chajnbers  and  in  open  court.  Can  you  believe  that  he  had 
forgotten  what  was  in  it?  Are  you  not,  on  the  contrary,  com- 
pelled to  believe  that  he  knew  it  by  heart  ? 

This  clause  of  the  agreement  is  crucial,  because  it  has  enabled. 
Otterson  and  Stuart  to  do  what  they  please,  regardless  of  the 
Fox.  And  now  Dwight  assures  the  stockholders  of  Fox  Film 
that  this  passage  is  not  in  the  agreement.  Here  is  the  passage,  as 
short  and  sweet  as  it  could  be  written:  "Fifth:  The  action  of 
any  two  of  the  trustees  with  respect  to  any  of  the  matters 
embraced  in  this  agreement  shall  be  deemed  to  be  the  action  of 
the  trustees." 

The  lawyers  presented  their  arguments  to  the  stockholders, 
and  at  last  it  was  time  for  the  vote.  Before  the  proxies  were 
taken,  Martin  Conboy  challenged  the  vote  of  the  Stern  committee, 
cast  by  Buckner;*and  this  led  to  a  very  funny  scene.  Conboy 
demanded  that  Buckner  be  sworn,  according  to  section  20  of  the 
General  Corporation  Laws ;  a  provision  requiring  that  those  cast- 
ing a  proxy  vote  shall  take  the  following  two  oaths :  first — "I  do 
solemnly  swear  that  in  voting  at  this  election  I  have  not,  either 


THE  STOCKHOLDERS  MEET  283 

directly,  indirectly  or  impliedly,  received  any  promise  or  any  sum 
of  money  or  anything  of  value  to  influence  the  giving  of  my  vote 
or  votes  at  this  meeting  or  as  a  consideration  therefor." 

And  second:  "I  do  solemnly  swear  that  I  have  not  either 
directly,  indirectly  or  impliedly  given  any  promise  or  any  sum 
of  money  or  anything  of  value  to  induce  the  giving  of  a  proxy 
to  me  to  vote  at  this  meeting,  or  received  any  promise  or  any 
sum  of  money  or  anything  of  value  to  influence  the  giving  of  my 
vote  at  this  meeting  or  as  a  consideration  therefor." 

Having  obtained  that  oath  from  Buckner,  Conboy  demanded 
it  from  Swaine,  who  had  cast  the  proxies  collected  by  Fox  and 
Leo.  Swaine  said  all  right,  and  then  Samuel  Untermyer  sug- 
gested that  they  ought  to  have  the  same  oath  from  Otterson  and 
Stuart.  Then  came  Alvin  Untermyer  with  a  highly  inconvenient 
suggestion. 

"Mr.  Alvin  Untermyer:  And  are  you  voting,  too,  Mr.  Con- 
boy? 

"Mr.  Conboy:  Yes. 

"Mr.  Alvin  Untermyer :  We  might  have  one  from  you,  too/* 

There  was  some  delay  while  the  forms  were  being  read  to  the 
inspectors  and  signed,  and  that  gave  Conboy  time  to  realize  that 
he  had  got  himself  into  a  predicament.  Said  Conboy:  "I  move 
the  swearing  be  closed/'  But  W.  F.  was  not  ready  to  have  it 
closed.  He  asked  that  Otterson  and  Stuart  should  take  the  oath, 
and  then  he  turned  to  Conboy  again.  But,  as  I  said,  these  lawyers 
belong  to  a  privileged  caste,  and  Untermyer  also  had  come  to 
realize  the  predicament  of  his  friend,  Conboy.  Said  he:  **I 
think  we  will  waive  Mr.  Conboy's  oath  anyway."  To  which  Con- 
boy  replied  gratefully,  "You  relieve  me  from  a  lot  of  embarrass- 
ment." 

"Mr.  Untermyer:  Especially  that  part  of  it  as  to  any  prom- 
ise of  anything  of  value. 

"Mr.  Conboy:  Certainly. 

"Mr,  Untermyer:  If  we  put  you  on  oath  and  asked  you  from 
where  the  thing  of  value  came  it  might  be  very  embarrassing. 

"Mr.  Conboy :  Yes,  very  embarrassing/* 

But  now  spoke  up  Stern,  chairman  of  the  stockholders'  com- 
mittee which  was  represented  by  Buckner.  Said  Stern :  _ 

"We  are  reputable  bankers  and  Mr.  Conboy  is  a  refutable 


284     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

lawyer  and  I  think  if  he  wants  our  oath  he  should  be  compelled 
to  take  one  himself. 

"Mr.  Conboy:  I  will  withdraw  my  proxy  before  I  sign  any 
oath.  I  am  a  member  of  the  bar,  and  I  am  here  as  an  attorney 
at  law  representing  interests,  and  if  I  have  to  take  an  oath  with 
respect  to  compensation  I  am  not  going  to  do  it,  and  Mr.  Unter- 
myer  knows  that  I  won't  do  it.  That  is  all  there  is  to  it." 

See  what  a  chance  that  gave  the  Fox.  All  day  long  he  had 
been  sitting  here,  being  baited  and  sneered  at  by  these  high-priced 
lawyers,  and  now  he  had  one  of  them  hung  up  by  the  heels.  Let 
us  follow  the  dialogue : 

"President  Fox :  Now  I  think  that  is  terrible,  Mr.  Conboy. 

"Mr.  Conboy:  Do  you? 

"President  Fox:   Yes. 

"Mr.  Conboy:  Well,  I  don't. 

"President  Fox:  No  one  here  in  the  room  wanted  that  oath 
signed  but  you. 

"Mr.  Conboy:  That  is  all  right.  If  anyone  challenges  my 
vote — 

"Mr.  Untermyer:  Don't  let  us  bother.    We  are  wasting  time. 

"President  Fox:  If  that  is  not  gall  I  don't  know  what  it  is, 
Mr.  Conboy. 

"Mr.  Untermyer:  Call  it  what  you  please,  but  it  is  not  nec- 
essary. 

"President  Fox:  It  is  perfectly  awful.  You  want  the  law 
against  anybody  except  yourself. 

"Mr.  Conboy:  That  is  right. 

"President  Fox:  That  is  wonderful.  I  think,  Mr.  Conboy, 
we  ought  to  let  you  withdraw  your  ballot. 

"Mr.  Conboy :  You  do  think  so,  do  you  ? 

"President  Fox:  I  do.    Would  you  care  to  withdraw  it?*' 

How  funny  to  see  that  jovial  Martin  Conboy  suddenly  turn- 
ing pale,  and  seeking  shelter  behind  his  big  brother,  Samuel  Unter- 
myer, the  chief  of  the  sacred  caste — to  whom  he  has  been  paying 
nice  compliments  all  day !  Says  Conboy : 

"It  is  all  in  the  hands  of  Mr.  Untermyer. 

"President  Fox:  I  am  running  this  meeting.  I  happen  to  be 
the  chairman.  * 

"Mr,  Conboy :  No,  Mr.  Untermyer  is  running  it. 


THE  STOCKHOLDERS  MEET  285 

"President  Fox :  Wait  a  minute.  Which  would  you  like  to 
do,  withdraw  your  ballot  or  take  the  oath  ? 

"Mr.  Conboy :  I  have  told  you  what  I  wanted  to  do. 

"President  Fox:  What  is  it? 

"Mr,  Conboy :  I  have  told  you. 

"Mr.  Untermyer:  Now  let  us  get  on. 

"President  Fox:  Mr.  Untermyer,  now  wait  a  minute.  Mr. 
Conboy,  what  would  you  like  to  do,  take  an  oath  or  withdraw 
your  ballot? 

"Mr.  Conboy :  I  have  told  you. 

"President  Fox:  Please  repeat  it. 

"Mr.  Conboy :  I  told  you  that  if  my  vote  was  challenged  I 
would  withdraw  my  proxy. 

"President  Fox :  Unless  you  take  an  oath  like  I  did,  I  chal- 
lenge your  vote. 

"Mr.  Conboy :  All  right,  if  Mr.  Untermyer  thinks  I  should, 
I  withdraw  my  proxy. 

"Mr.  Untermyer:  I  don't  think  so.    I  would  not  do  it. 

"President  Fox :  I  bow  to  your  judgment,  sir.    (Applause.) 

"Mr.  Untermyer:  This  is  a  brother  member  of  the  bar  and 
a  very  good  friend  of  mine. 

"Mr.  Buckner :  Lawyers  should  never  work  for  nothing,  Mr. 
Fox  is  trying  to  create  a  precedent,  that  lawyers  should  work 
for  nothing. 

"Mr.  Conboy:  I  hope  he  won't  create  that  precedent,  and  I 
don't  think  that  you  will  let  him.  Mr.  Untermyer  certainly  does 
not.  It  is  much  more  important  to  him  in  this  connection  than 
anybody  else. 

"Mr.  Buckner :  That  is  why  he  sides  with  you. 

"Mr.  Conboy:  I  thought  so  too.  I  thought  I  was  in  safe 
hands. 

"Mr.  Untermyer :   But  you  did  start  something,  didn't  you  ? 

"Mr.  Conboy:  Didn't  I?" 

Such  is  the  lawyer's  comment  on  the  matter ;  and  may  I  add 
a  few  words  from  a  mere  layman?  It  seems  to  me  that  if  there 
is  such  a  thing  as  stating  a  plain  intention  in  plain  language,  the 
corporation  statutes  of  New  York  State  undertook  to  prohibit  and 
do  prohibit  a  paid  attorney  from  casting  a  proxy  vote  at  a  stock- 
holders' meeting.  But  all  the  attorneys  ignore  that  law,  and 


286     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

intend  to  go  on  ignoring  it,  and  therefore  Samuel  Untermyer 
stepped  in  and  prevented  William  Fox  from  pinning  Martin  Con- 
boy  down  on  a  dangerous  issue. 

The  votes  were  counted,  and  next  morning  there  was  another 
meeting,  and  the  tellers  reported  the  result,  which  was  that  the 
resolution  in  favor  of  the  Lehman  plan  had  been  carried  by  a 
vote  of  914,405  against  33,085  shares.  The  meeting  was  declared 
adjourned;  but  Richard  Dwight  wasn't  satisfied  to  have  it 
adjourned,  and  retired  into  a  corner  and  continued  the  meeting 
all  by  himself.  In  the  meantime,  at  the  request  of  the  stock- 
holders, William  Fox  made  a  little  speech: 

"I  cannot  promise  you  that  I  am  going  to  work  any  harder 
from  now  on  than  I  have  in  the  past,  because  I  don't  believe  I 
have  the  same  vitality  left.  After  all,  I  gave  this  company  my 
best  years,  from  twenty-one  to  fifty-one,  and  I  do  not  believe 
that  I  have  got  thirty  years  more  left,  and  I  am  sure  if  I  had 
they  won't  be  years  with  as  much  energy  as  I  was  able  to  expend 
in  the  last  thirty.  But  all  that  I  have  belongs  to  these  companies, 
I  pledge  you  that/'  (Applause.) 


REEL  TWENTY-FOUR 
THE  JAPANESE  MEETING 

OUR.  Fox  had  his  vindication,  and  was  very  happy,  for  a  few 
days.  He  had  his  bankers,  and  his  plan,  and  his  stockhold- 
ers* consent,  and  in  a  month  or  so  he  was  going  to  have  $65,000,- 
000,  and  pay  all  his  debts,  and  consolidate  his  companies,  and 
double  their  income  through  a  saving  of  $17,000,000  a  year.  Inci- 
dentally he  would  fire  all  his  traitor  executives,  and  clean  house, 
and  start  life  over  again — such  was  his  fond  dream. 

But  he  was  reckoning  without  the  Telephone  Company,  Hal- 
sey,  Stuart,  and  the  Chase  Bank.  They  had  no  idea  of  letting  go 
their  hold  upon,  the  Fox,  and  they  sat  down  with  their  shrewd 
attorneys  to  figure  the  next  step  in  the  process  of  hamstringing 
and  paralyzing  their  victim.  They  decided  that  the  time  had 
come  for  Winfield  R.  Sheehan  to  earn  the  $1,800,000  of  new 
salary.  On  March  18,  in  the  Supreme  Court  of  New  York 
County,  Wmfield  R.  Sheehan,  being  duly  sworn,  deposed  and 
said  that  he  was  the  plaintiff  herein,  and  was  vice  president  and 
general  manager  of  the  Fox  Film  Corporation,  and  had  been 
such  for  the  past  fifteen  years,  commencing  with,  the  inception 
of  that  corporation.  He  went  on  blandly  and  serenely  to  tell  the 
world  in  substance  that  he  was  Fox. 

"I  was  the  responsible  general  manager  and  chief  executive 
of  this  company,  and  under  my  management  and  supervision,  the 
company  has  prospered  enormously.  .  .  . 

"With  the  exception,  however,  of  theatre  expansion  and 
financial  arrangements  and  laboratory  work,  I  was  responsible 
for  all  of  the  business  activities  of  this  company. 

<fl  have  a  more  intimate  knowledge  of  the  general  business 
details,  production  details,  distribution  details,  and  all  other  fields 
which  are  under  my  supervision,  than  any  other  official,  executive, 
or  employe  of  the  company." 

287 


288     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Sheehan  told  the  world  exactly  how  "enormously"  the  com- 
pany had  prospered  tinder  his  "management  and  supervision." 
He  cited  "the  aggregate  gross  annual  business  of  the  company 
derived  from  the  distribution  of  pictures  produced  by  it" : 

1925 .....$21,321,869.59 

1926 23,547,633.92 

1927 25,542,718.66 

1928 66,525,737.48 

1929 72,000,000.00  (approximately) 

"Based  on  my  knowledge  of  the  plans  and  arrangements  made 
for  production  for  the  year  1930,  I  have  every  reason  to  believe 
that  the  rate  of  increase  of  gross  business  and  net  profits  for  that 
year,  will  be  approximately  25  per  cent  more  than  for  the  year 
1929." 

This  affidavit  of  Sheehan  was  not  merely  filed  in  court,  but 
was  printed  in  a  pamphlet  by  Halsey,  Stuart  &  Co.,  and  sent  to 
all  the  stockholders  of  the  Fox  corporations.  W.  F.  promptly 
printed  an  answer  and  sent  it  to  the  stockholders,  and  stated  the 
true  figures  of  the  income  of  the  company  derived  from  the 
distribution  of  pictures,  as  follows: 

1925 $20,230,007 

1926 20,639,363 

1927 22,847,131 

1928 26,263,210 

1929 31,317,648 

You  will  note  that  to  the  last  two  years'  items,  Mr,  Sheehan 
added,  out  of  his  imagination,  a  trifle  over  $40,000,000  per  year. 
He  got  these  millions  partly  out  of  the  receipts  for  theatre  admis- 
sions of  the  Wesco  Theatre  Company,  a  concern  with  which  he 
had  absolutely  nothing  to  do,  the  concern  being  managed  by 
Harold  B.  Franklin. 

It  is  interesting  to  take  up  the  annual  report  of  Fox  Film  of 
December  27,  1930,  which  was  after  W.  F.  had  been  ousted.  At 
the  time  this  report  was  issued,  Sheehan  was  still  vice  president 
and  general  manager,  and  a  director  of  the  corporation.  He  must 
have  read  this  report  and  approved  it.  Does  he  there  tell  the 
world  what  he  told  in  his  affidavit  of  March  18  of  the  same  year? 
Does  he  there  say  that  the  "aggregate  gross  annual  business  of 


THE  JAPANESE  MEETING  289 

the  company  derived  from  the  distribution  of  pictures  produced 
by  it  was  $66,525,737.48  in  1928,  and  approximately  $72,000,000 
in  1929"  ?  No,  he  gives  a  table  of  "gross  rentals,"  which  is  the 
same  thing,  and  he  there  shows  for  1928  $22,626,747,  and  for 
1929  $30,803,974. 

And  what  about  his  serene  prophecy  for  the  year  1930 — 
"based  on  my  knowledge  of  the  plans  and  arrangements  made 
for  production"— that  the  gross  rentals  would  be  $90,000,000? 
For  some  strange  reason,  the  1930  report  of  Fox  Film  stops  its 
table  of  gross  rentals  with  the  year  1929,  The  corporation  under 
the  Clarke-Sheehan  regime  apparently  is  not  proud  of  its  record 
made  in  the  year  1930,  and  deftly  side-steps  the  issue.  Nor  can  I 
tell  you  the  gross  rentals  for  the  year  1931,  because  they  now 
tell  the  world  only  their  total  gross  income,  whi'ch  includes 
theatre  receipts.  The  reason  for  this  is  very  simple:  they  have 
increased  the  number  of  their  theatres,  and  therefore  the  gross 
total  of  theatre  receipts  shows  an  increase,  which  automatic 
increase  they  use  to  conceal  the  fact  that  their  receipts  from  film 
rentals  are  steadily  declining? 

After  telling  how  Sheehan  had  run  Fox  Film,  the  affidavit 
goes  on  to  tell  how  Fox  very  foolishly  failed  to  consult  Sheehan 
about  financial  matters.  Fox  failed  to  inform  him  as  to  how  the 
Loew  purchase  was  to  be  financed.  All  that  Fox  did  was  to 
inform  Sheehan  "in  a  general  way  of  his  intentions."  To  this 
I  quote  Fox's  answer,  as  follows: 

"The  fact  is  that  Sheehan  was  in  New  York  when  this 
transaction  was  being  negotiated  and  consummated.  At  that 
time  it  became  necessary  to  interview  Mr.  William  Donovan, 
the  then  Assistant  Attorney-General  of  the  United  States,  who 
was  then  Chairman  of  the  Boulder  Dam  Project  and  was  residing 
at  Bishop's  Lodge,  New  Mexico.  I  took  Mr.  Sheehan  with  me 
to  visit  Mr.  Donovan.  We  traveled  together  for  three  days  and 
three  nights  to  Bishop's  Lodge  to  see  Mr.  Donovan.  During  the 
long  journey  we  talked  about  nothing  except  the  purchase  of 
the  Loew  stock.  We  had  seen  Mr.  Donovan,  and  from  Bishop's  . 
Lodge,  New  Mexico,  Mr.  Sheehan  and  I  traveled  to  Los  Angeles. 
We  continued  to  talk  of  barely  anything  else  except  the  pur- 
chase of  the  Loew  stock  and  our  conference  with  Mr.  Donovan. 
Mr.  Sheehan  remained  with  me  in  Los  Angeles  for  a  week  or 


290     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

ten  days  thereafter,  and  we  spent  much  of  our  time  continuing 
the  discussion  of  the  Loew  purchase.  Mr.  Sheehan  was  enthu- 
siastic about  making  the  purchase ;  urged  it  in  the  strongest  terms, 
and  traveled  more  than  7,000  miles  to  assist  me  in  consummating 
that  purchase/' 

Having  recited  many  other  blunders  of  his  employer  and  for- 
mer friend,  Sheehan  got  down  to  the  earning  of  his  increase  in 
salary.  He  asked  the  Court  to  kill  the  Lehman  plan,,  and  force 
W.  R  back  into  the  arms  of  Stuart  and  Otterson.  He  prayed 
"that  this  Court  decree  specific  performance,  compelling  Mr.  Fox 
to  carry  out  the  conditions,  terms  and  covenants  of  the  trust 
agreement,  and  I  ask  that  this  motion  for  temporary  injunction  be 
granted,  restraining  and  enjoining  the  defendants  (other  than 
Halsey,  Stuart  &  Co.,  Inc.,  Stuart,  Otterson,  and  Electrical 
Research  Products,  Inc.)  from  going  through  with  the  Banc- 
america-Blair  plan,  or  issuing  any  securities  thereunder,  or  doing 
any  act  or  thing  to  interfere  with  the  trust  agreement/' 

At  the  same  time  with  the  Sheehan  suit  came  a  flood  of  new 
receivership  actions  by  various  creditors  in  the  State  courts; 
also,  in  the  Federal  courts,  the  affidavit  of  Harold  L.  Stuart, 
alleging  prejudice  on  the  part  of  Judge  Coleman.  This  affidavit 
recited  a  long  list  of  the  things  which  Coleman  had  done,  and 
a  number  which  he  had  not  done,  to  favor  Fox  and  hinder  Stuart ; 
it  concluded  by  asking  that  Judge  Coleman  "enter  upon  the 
records  of  this  Court  the  certificate  of  disqualification" — that  is, 
his  own  disqualification.  This  was  done,  according  to  the  law, 
and  a  new  judge  was  appointed,  and  the  whole  complicated  pro- 
ceedings had  to  begin  all  over.  The  new  judge,  Knox,  had  to 
study  the  case — and  how  long  would  this  take,  and  what  would 
the  creditors  do  in  the  meantime?  It  was  Halsey,  Stttart's  trump 
card,  and  a  knock-out  for  our  poor  little  Fox, 

Consider  the  situation  which  confronted  the  Fox,  He  was 
not  admitted  to  the  secret  conferences  of  either  his  enemy- 
bankers  or  his  friend-bankers,  but  he  knew  them  and  could  guess 
what  was  happening.  We  also  know  them  by  now,  and  can 
guess.  Did  Harry  Stuart  and  his  lawyer  Bogue  first  go  to  Elisha 
Walker  and  his  lawyer  Swaine?  Or  did  the  Walker-Swaine 
pair  seek  ottt  the  Stuart-Bogue  pair  ?  We  catxnot  say ;  but  remem- 
ber that  Swaine  has  said  in  open  court  that  Bogue  is  one  of  his 


THE  JAPANESE  MEETING  291 

"closest  personal  friends/'  and  that  he  expects  to  keep  him  as 
such,  even  though  he  has  called  him  in  open  court  a  breaker 
of  pledges.  Remember  also  that  Swaine  has  stated  that  the 
Lehman  group  took  up  the  new  financing  plan  only  because  they 
had  been  assured  that  Halsey,  Stuart  would  make  no  objection 
to  their  undertaking.  Now  they  have  learned  that  Halsey,  Stuart 
make  violent  and  furious  objection,  and  are  going  to  fight  them 
bitterly.  Remember,  also,  that  Walker  and  also  Dillon  are 
directors  in  the  Chase  Bank,  and  that  Blair  &  Company  is  known 
as  the  "back  door"  of  that  bank.  It  has  been  a  family  quarreL 

Since  the  Walker-Swaine  pair  have  shown  themselves  the 
more  polite  and  conciliatory,  let  us  assume  that  they  make  the 
first  move.  Let  us  picture  them  inviting  the  Stuart-Bogue  pair 
to  a  luncheon,  with  perhaps  Bobbie  Lehman  and  Clarence  Dillon 
— another  luncheon  where  Dillon  will  be  nervous  and  eat  all 
the  grapes.  Or  perhaps,  since  it  is  now  the  end  of  March,  the 
grapes  from  California  will  be  replaced  by  strawberries  from 
Florida.  They  ask  whether  it  may  not  be  possible  to  come  to  a 
friendly  understanding;  and  Stuart-Bogue  make  reply  as 
follows: 

"Look  your  proposition  over  and  see  what  you  have  got: 
a  tangle  of  law-suits  and  no  possible  way  out.  Judge  Colemaa 
was  your  oi>e  best  bower '  and  you  have  lost  him.  We  are  going* 
to  get  an  injunction  in  the  State  Supreme  Court  on  the  Sheehan 
motion,  and  you  won't  be  able  to  do  any  financing.  Judge  Knox 
will  be  forced  to  appoint  a  receiver.  And  whether  he  is  your 
man  or  tmr  man  makes  no  great  difference,  because  we  have  got 
the  contract  for  the  preferential  financing,  and  whatever  financing 
is  done,  we  will  do  it  or  we  will  tie  up  the  receiver. 

"In  short,  there  isn't  any  way  out  for  you,  and  it  only  goes 
to  show  what  we  told  you  in  the  beginning,  that  you  were  foolish 
to  butt  in  on  this  job.  This  is  our  Fox;  we  had  him  hung  up  all 
ready  for  skinning,  and  why  should  you  horn  in  and  take  him 
away  from  us  ?  You  are  breaking  all  the  rules  of  the  game,  and 
making  yourself  a  lot  of  enmity  that  some  day  you  will  regret. 
We  all  agree  that  we  don't  like  this  little  Fox  from  Hungary  or 
Jerusalem  or  wherever  it  is.  He  does  a  lot  of  his  financing  for 
himself,  and  you  can  see  what  a  dirty  crook  he  is  from  the  fact 
that  he  got  up  this  Fox  Securities  Corporation  and  proposed 


292     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

to  sell  $35,000,000  worth  of  debentures  without  any  bankers  at 
all !  Why  in  the  world  should  we  gentlemen  go  on  fighting  each 
other  and  let  this  little  blankety-blank  get  away  with  a  whole 
skin?" 

So  much  for  Stuart-Bogue.  We  can  imagine  Walker-Swaine- 
plus-Lehman-Dillon  making  reply:  "There's  a  big  'spread'  in 
this  financing,  and  there  ought  to  be  enough  to  go  around.  Will 
you  let  us  in  on  it?" 

Says  Stuart-Bogue:  "We  might  give  you  a  share — say  one- 
fourth^ 

"The  hell  you  say!"  says  Walker-Swaine-plus-Lehman- 
Dillon.  "If  that's  the  best  you  can  think  of,  this  luncheon  might 
as  well  stop  with  the  cocktails.'* 

They  argue  all  the  way  through  the  cold  consomme,  and  the 
olives  and  celery,  and  the  filet  of  salmon.  By  the  time  they 
get  to  the  broiled  spring  chicken  and  peas,  Stuart-Bogue  have 
come  to  the  point  where  they  are  offering  one-third  of  the  financ- 
ing; and  that  proposition  stands  until  Clarence  Dillon  has  eaten 
the  last  of  the  Florida  strawberries,  and  everybody  has  smoked 
a  couple  of  cigars  or  half  a  dozen  cigarettes.  It  is  only  when 
Walker-Swaine-plus-Lehman-Dillon  have  got  up  to  leave  in  dis- 
gust, and  after  the  Stuart-Bogue  group  have  telephoned  to, 
Otterson-Pratt  and  to  Wiggin-Chase  Bank  that  they  finally  settle 
the  matter  upon  the  basis  of  50-50. 

Understand  just  what  these  gentlemen  are  bargaining  over. 
There  is  going  to  be  something  over  $100,000,000  worth  of  new 
Fox  securities  sold  to  the  public,  and  these  gentlemen  are  to  do 
the  selling,  and  pay  themselves  a  whole  string  of  commissions  and 
stock  allotments,  some  of  them  secret,  so  that  it  is  impossible 
to  estimate  the  totals.  But  Stuart-Bogue  plus  Wiggin-Chase 
Bank  expect  to  get  not  less  than  $40,000,000  for  their  job  of 
stringing  up  the  Fox,  and  the  Lehman  group  are  demanding 
half  of  this  for  not  stealing  him  away.  Otterson  and  his  Tele- 
phone Company  will  get  the  Tri-Ergon  patents,  provided  they 
can  manage  to  frighten  them  out  of  the  Fox  in  the  course  of 
the  deal. 

All  of  these  gentlemen  agree  in  not  wanting  a  receivership, 
because  they  might  not  be  able  to  control  the  receiver.  Obvi- 
ously, it  is  cheaper  and  safer  to  buy  the  Fox  out.  If  they  come 


THE  JAPANESE  MEETING  293 

to  an  agreement  among  themselves,  they  can  force  him  to  sell, 
for  he  will  no  longer  have  any  bankers,  nor  any  hope  of  being 
financed,  and  a  receivership  would  wipe  out  his  voting  shares 
automatically  and  leave  him  nothing.  Therefore  he  will  sell; 
and  the  bankers  will  find  somebody  to  buy,  and  will  lend  the 
money  for  that  purpose,  charging  another  commission.  The 
buyer  will  have  the  privilege  of  looting  the  companies  of  what- 
ever the  bankers  have  left. 

As  I  say,  I  don't  know  just  how  this  deal  was  made ;  I  don't 
know  who  made  the  first  move,  nor  where  the  luncheon  was  held ; 
the  menu  I  have  given  here  is  based  on  what  I  have  observed  at 
similar  affairs.  But  before  long  you  will  see  it  admitted  that  a 
deal  has  been  made;  and  you  will  see  its  terms  embodied  and 
fixed  in  court  records  and  issues  of  stocks  and  bonds. 

What  would  be  the  first  hint  that  W.  F.  would  get  of  such 
a  bankers'  deal?  In  the  course  of  his  negotiations  with  the 
Lehman  bankers  they  had  raised  one  very  important  considera- 
tion. Suppose  that  while  they  were  going  ahead  with  their  plans 
for  new  financing,  and  incurring  the  animosity  of  the  all-powerful 
Chase  Bank  and  the  all-powerful  Telephone  Company — suppose 
that  Fox  should  decide  to  sell  his  voting  shares,  and  thus  temzi- 
nate  his  relation  with  his  companies?  Again  and  again  he  had 
assured  them  that  he  would  not  do  it  without  consulting  the 
Lehman  group.  But  they  weren't  satisfied,  and  required  him 
to  write  them  a  letter  in  which  he  assured  them  that  he  would 
not  offer  these  voting  shares  for  sale. 

And  now  suppose  that  a  bankers'  deal  was  made,  such  as  I 
have  described  at  the  imaginary  luncheon — how  would  W.  F. 
know  that?  The  answer  is  easy:  he  would  get  a  letter  from 
the  Lehman  group,  inf  orming  him  that  they  no  longer  held  him 
bound  by  his  promise  not  to  sell  the  voting  shares!  A  day  or 
two  after  Judge  Coleman  was  taken  out  of  the  case,  W.  F. 
received  such  a  letter.  And  the  very  day  he  received  that  letter, 
came  his  friend  Albert  Greenfield  from  Philadelphia.  Greenfield, 
you  remember,  had  been  W.  F/s  representative  in  several  deals. 
He  had  sold  the  First  National  shares  for  him  just  after  the 
panic,  and  he  had  tried  to  sell  the  Loew  shares  and  the  West 
Coast  shares.  So  he  was  known  to  Wall  Street  as  W.  F/s  "con- 
tact man."  And  now  comes  Greenfield  again,  and  wants  to  know, 


294     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

would  W,  F.  care  to  sell  his, voting  shares?  W.  F.  says  no,  he 
wouldn't  care  to  sell  them. 

You  recall  that  the  Lehman  group,  under  their  agreement, 
were  to  do  their  financing  not  later  than  the  15th  of  April.  But 
all  these  legal  entanglements  have  delayed  them,  and  it  is  now 
the  end  of  March,  and  there  is  no  sign  of  financing,  and  Judge 
Coleman  is  out,  and  W.  F.  says  to  Untermyer:  "It  looks  to  me 
as  if  this  law  business  is  going  to  take  a  long  time,  because 
Judge  Knox  will  have  to  become  familiar  with  the  case.  And 
here  in  two  weeks  the  commitment  of  my  bankers  will  expire.  It 
seems  to  me  you  ought  to  give  me  some  idea  how  long  you  will 
take  in  court,  and  then  we  ought  to  meet  these  bankers  and  get 
an  extension  of  time."  Untermyer  said  he  thought  the  legal 
proceedings  would  take  until  June,  and  W*  F.  asked  him  to  get 
the  bankers  together  in  one  room  and  ask  for  an  extension  of 
the  Lehman  plan  until  June  15. 

It  was  Monday,  March  3L  W.  F.  remembered  the  date 
because  the  following  day  was  the  birthday  of  that  little  daughter 
of  his,  who  had  made  the  remark  about  not  losing  your  head  when 
you  need  it  the  most.  W,  F*  with  Samuel  and  AJvin  Untermyer 
called  by  appointment  at  the  offices  of  Bancamerica-Blair  Cor- 
poration and,  to  their  surprise,  they  were  kept  waiting  in  the 
outer  office  for  nearly  an  hour.  That  isn't  usual,  because  "Papa" 
Untermyer  is  a  very  distinguished  old  gentleman,  and  his  time 
is  worth  a  lot  of  money.  W.  F.'s  suspicions  were  aroused,  and 
he  said;  "I  think  we  ought  to  plan  out  our  program  when  we 
go  in  there,  and  I  wish  it  would  be  followed  as  I  suggest — that 
neither  Alvin.  or  myself  open  our  mouths,  but  that  you  do  all 
the  talking,  and  we  be  allowed  to  observe  the  banking  group  and 
their  lawyers."  That  was  agreed  to,  and  W.  F.  narrates : 

"After  waiting  an  hour  we  were  ushered  in.  There  sat  this 
group  of  men,  I  should  say  fifteen  in  number.  As  I  came  into 
the  room,  they  appeared  to  me  as  though  they  were  all  Japanese. 
Every  man  in  the  room,  as  I  watched  him,  was  wearing  a  Japa- 
nese mask;  all  their  faces  were  tense.  I  could  understand  why 
we  had  been  kept  waiting  outside — they  had  been  rehearsing  this 
play  that  was  about  to  take  place.  Every  man  in  that  room 
knew  that  Judge  Coleman  was  no  longer  in  the  case ;  that  Halsey, 
Stuart  had  filed  the  affidavit  of  prejudice;  that  the  court  that 


THE  JAPANESE  MEETING  295 

had  held  this  thing  together  was  no  longer  there  to  do  it  I  felt 
that  every  man  in  the  room  knew  that  Halsey,  Stuart  had  played 
their  final  trump,  and  won  the  game.  As  I  observed  each  of 
the  faces  of  the  men  in  the  room,  I  was  receiving  mental  com- 
munications that  something  had  gone  wrong.  I  was  not  in  the 
presence  of  the  tremendously  friendly  group  who  had  been  argu- 
ing in  court  that  their  plan  should  be  the  only  plan  submitted 
to  the  stockholders.  At  the  stockholders*  meeting  these  men  had 
been  like  schoolboys  in  a  contest*  What  in  God's  world  could 
they  be  thinking  about  now? 

"While  all  this  was  in  my  head,  Untermyer  said:  'Gentlemen, 
because  of  this  great  amount  of  litigation,  and  because  of  the 
removal  Of  Judge  Coleman,  Fox  has  requested  that  we  have  this 
meeting  to  inquire  from  you  whether  or  not  you  would  be  willing 
to  renew  your  contract  to  supply  this  financing  for  sixty  days 
longer.'  There  was  dead  silence,  and  at  the  other  end  of  the 
room  Mr.  Swaine,  attorney  for  the  Bancamerica-Blair  Corpora- 
tion, asked  Untermyer  a  wholly  irrelevant  question." 

This  question  had  to  do  with  certain  law  suits  that  were  pend- 
ing. What  would  be  the  effect  of  them,  and  how  was  Untermyer 
going  to  go  about  it?  This,  of  course,  caused  Untermyer  to  go 
into  a  lengthy  explanation,  wholly  immaterial  to  the  question 
about  an  extension  of  time.  It  took  Untermyer  fifteen  minutes 
to  answer,  and  when  he  had  finished,  he  asked  again  whether 
these  mes.  would  be  ready  and  willing  to  extend  the  financing 
contracts  to  June  15th. 

"Mr.  Royce,  a  lawyer  representing  the  Lehman  group,  then 
asked  Untermyer  a  question,  again  a  carefully  prepared  one,  and 
again  it  took  Untermyer  fifteen  minutes  of  explanation  before 
he  could  conclude  the  answer.  Not  a  sound  out  of  all  these 
bankers ;  not  a  word,  not  an  eyelash  movement — they  were  just 
Japanese  diplomats !  You  couldn't  read  what  was  in  their  faces 
at  all,  you  had  to  guess  at  it.  And  then  Untermyer  for  the  third 
time  asked  whether  they  would  extend  the  contract,  and  this 
time  Swaine,  who  had  asked  the  first  question,  began  asking  a 
second  question.  I  went  over  to  Alvin  and  said:  'Go  and  tell 
your  father  not  to  ask  our  question  again,  but  to  leave  with  our 
question  unanswered';  and  so  we  did  leave.  It  was  never 
replied  to.** 


296     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Our  Fox  did  not  tell  his  lawyers  what  was  in  his  own  mind. 
He  went  off  and  worked  out  the  problem  himself.  The  birthday 
of  his  little  girl  was  the  day  that  he  needed  his  head,  and  on  that 
day  he  telephoned  to  his  friend  Greenfield  to  come  up  from 
Philadelphia,  Yes,  said  W.  F.,  he  would  be  willing  to  sell  his 
voting  shares.  Who  wanted  to  buy  them?  Greenfield  answered 
that  the  person  who  wanted  to  buy  them  was  Harley  L.  Clarke 
of  Chicago. 

You  have  not  forgotten,  I  am  sure,  how  the  great  utilities 
magnate  had  come  from  Chicago  two  or  three  months  back,  and 
offered  W.  F.  a  third  of  $100,000,000  for  his  voting  shares— 
on  condition  that  W.  F.,  before  making  the  sale,  would  sell  to 
Clarke  the  Loew  shares,  owned  by  W.  F/s  company,  at  a  price 
$40,000,000  below  what  the  company  had  paid  for  them.  Now 
Clarke  conies  again,  and  this  time  he  says  he  is  willing  to  pay 
$15,000,000  cash,  and  with  no  strings  tied  to  it.  W.  F.  says 
"O.  K." 

And  so,  on  the  fourth  day  after  the  "JaPane$e  meeting," 
Clarke  and  his  lawyers  are  in  conference  with  W.  F.  and  Alvin 
Untermyer  in  a  hotel  room.  It  is  a  Saturday  morning — our  Fox 
has  waited  until  "Papa"  has  gone  down  to  his  penthouse  retreat 
on  the  roof  of  a  hotel  in  Atlantic  City.  It  appears  that  "Papa" 
is  still  trusting  the  Lehman  bankers,  and  his  client  thinks  he 
mightn't  approve  this  deal,  so  he  isn't  to  be  told  about  it  until 
it  is  over. 

You  may  recall  the  story  about  A.  C.  Blumenthal — how  when 
W.  F,  went  to  Clarke's  office  with  Greenfield  to  discuss  the  terms 
of  the  sale,  he  found  little  Blumy  there,  and  he  told  Blumy's  life 
story  to  Clarke,  and  then  demanded  that  Clarke  order  Blumy 
out,  which  Clarke  did.  W.  F,  was  interested  to  learn  afterwards 
that  Clarke  had  promised  Blumy  a  commission  of  $500,000  on 
this  deal — always,  of  course,  out  of  the  treasury  of  the  Fox  com- 
panies. 

There  is  another  interesting  story  connected  with  these  pre- 
liminary negotiations.  W.  F.  noted  that  every  item  in  the  demand 
of  Harley  Clarke  had  already  been  prepared  in  the  demands  of 
the  Lehman  group.  Clarke  wanted  W.  F.  to  surrender  his  Fox 
Movietone  stock,  and  his  Grandeur  patents,  which  were  his  per- 
sonal property.  Also  Clarke  wanted  him  to  surrender  his  Tri- 


THE  JAPANESE  MEETING  297 

Ergon  patents;  but  that  was  a  subject  upon  which  W.  F.  had 
sworn  a  domestic  vow.    He  says : 

"My  friend  Greenfield,  in  his  negotiations  for  the  sale  of 
my  voting  shares,  at  all  times  included  the  Tri-Ergon  patents 
in  the  deal.  Greenfield  took  the  position  that  he  had  been 
informed  again  and  again  that  these  patents  were  valueless,  and 
so  I  might  just  as  well  throw  them  in.  There  was  a  time  during 
these  sessions  that,  rather  than  go  on  any  further,  tired  as  I  was, 
I  was  ready  to  surrender  these  patents.  But  Mrs.  Fox  took  the 
position  that  that  could  not  be;  it  was  these  patents  that  had 
gotten  me  into  the  difficulty;  they  were  the  one  thing  the  Tele- 
phone Company  wanted,  and  the  one  thing  the  Telephone  Com- 
pany was  not  going  to  get.  She  told  Greenfield  of  the  humble 
way  in  which  we  had  started;  our  first  year  in  the  $11  a  month 
apartment  had  been  the  happiest  year  of  her  life,  and  she  was 
willing  to  go  back  to  such  an  apartment,  if  she  could  take  those 
patents  with  her. 

"Greenfield  frankly  said  that  he  could  not  be  an  impartial 
friend  and  advisor  in  this  matter.  The  securities  company,  of 
which  he  was  chairman,  was  my  creditor  for  $10,000,000,  which 
was  almost  half  the  capital  of  the  company,  and  he  had  to  think 
about  that  money.  So  throughout  all  this  difficulty,  Greenfield, 
who  had  constant  access  to  my  home,  was  urging  that  the  thing 
to  do  was  to  sell  these  voting  shares  and  give  the  Tri-Ergon 
patents  with  them.  I  recall  one  day  when  he  and  Harry  Sund- 
heim  were  at  my  home,  and  Greenfield  was  persisting  that  the 
transaction  be  closed,  and  that  the  Tri-Ergon  patents  be  sur- 
rendered. Mrs.  Fox  was  in  the  doorway,  with  only  a  curtain 
between  us,  listening  to  this  conversation  of  Greenfield's.  She 
came  into  the  room,  and  went  into  a  rage  of  a  kind  I  would  never 
like  to  see  her  or  anyone  in  again ;  it  resulted  in  a  terrific  expres- 
sion of  frenzy,  and  she  finally  dropped  to  the  floor  and  passed 
out.  For  a  while  I  thought  she  was  dead ;  it  took  us  half  an  hour 
to  bring  her  to  again.  It  was  then  that  Greenfield  realized  that 
he  must  never  again  mention  the  Tri-Ergon  patents,  and  that  if 
there  were  ever  to  be  a  sale,  it  would  have  to  be  done  without 
those  patents." 

Picture  now  Greenfield  and  Alvin  Untermyer  and  W.  R  in 
Clarke's  office,  arguing  with  Clarke  and  his  lawyers  over  the 


298     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

terms  of  the  sale.  W.  F.  is  to  receive  a  certified  check  for 
$15,000,000,  and  he  is  demanding  a  20  per  cent  participation  in 
the  new  financing;  which  means  not  merely  that  he  will  make 
some  extra  money,  but  will  be  privileged  to  sit  in  at  the  con- 
ferences of  the  great  bankers,  whom  he  respects  for  their  dignity 
and  power,  even  while  they  have  been  holding  him  tip.  He  has 
the  fond  idea  that  he  is  going  to  be  able  to  make  useful  sug- 
gestions to  them,  and  help  them  in  running  these  companies, 
which  be  knows  so  well  and  which  they  know  hardly  at  all. 

Yes,  he  really  thinks  they  are  going  to  run  the  companies, 
and  not  merely  run  them  into  the  ground.  Accordingly,  he  requires 
that  he  be  a  director  for  five  years ;  and  that  they  agree  to  estab- 
lish an  advisory  board,  and  make  him  chairman  of  this  board, 
to  give  them  the  best  knowledge  he  has.  In  the  effort  to  make 
the  hankers  appreciate  his  knowledge — since  they  only  appre- 
ciate what  costs  a  lot  of  money — he  makes  them,  pay  him.  a  salary 
of  $500,000  a  year  for  five  years.  He  agrees  to  give  Fox  Film 
a  license  for  the  free  use  of  the  Tri-Ergon  and  Grandeur  patents  ; 
but  not  the  patents  themselves — no,  for  W.  F,  has  to  go  home 
to  his  wife ! 

In  the  course  of  this  bargaining  came  a  curious  development: 

"We  had  gone  into  this  conference  at  10  o'clock  Saturday 
morning,  and  were  still  drawing  these  papers  at  about  1  o'clock 
Sunday  morning.  I  said  to  Clarke :  'When  the  bankers  sent  me 
a  letter  stating  that  they  no  longer  objected  to  my  selling  my 
voting  shares,  they  extracted  from  me  a  promise  that  the  pur- 
chaser of  my  shares,  if  he  did  any  financing,  would  have  to  do 
it  through  them;  they  would  have  to  be  in  the  syndicate,  and  at 
least  three-fourths  of  the  financing  would  be  handled  by  them/ 
But  Clarke  insisted  that  the  Chase  Bank  and  Halsey,  Stuart 
intended  selling  the  securities  necessary  to  give  him  the  money; 
and  for  the  greater  portion  of  the  evening  I  stood  firm  that 
Bancamerica-Blair,  Lehman  Brothers,  and  Dillon,  Read  receive 
no  less  than  75  per  cent  of  the  financing.  In  fact,  for  a  while 
it  looked  as  though  the  deal  would  fall  through ;  but  I  had  made 
this  promise,  and  I  was  going  to  see  that  it  was  carried  out. 

"At  about  1  r4S  in  the  morning,  Clarke  said :  'Some  people 
haven't  any  sense.  Here  you  have  battled  for  three  hours  to 
give  your  bankers  protection.  Would  you  like  to  have  me  prove 


THE  JAPANESE  MEETING  299 

to  you  that  you  have  no  bankers?'  I  said,  'Yes,  I  would  like  to 
have  proof  of  that/  He  said,  'All  right.  Do  you  know  Ned 
Tinker?*  I  said  no.  (Tinker  was  then  president  of  the  Chase 
Securities  Corporation,  and  chairman  of  the  Chase  Bank.)  Clarke 
said :  'You  ask  him  whether  or  not  he  made  an  arrangement  in 
behalf  of  Halsey,  Stuart  and  the  Chase  Bank,  that  your  group 
of  bankers  were  to  have  50  per  cent,  and  ask  him  whether  or 
not  they  didn't  have  that  arrangement  on  last  Monday/  Monday, 
you  understand,  was  the  day  of  that  meeting  with  the  bankers, 
which  I  called  the  'JaPanese  meeting/  because  they  all  behaved 
that  way.  Here,  you  see,  it  was  being  revealed  to  me  that 
already,  before  I  went  to  that  meeting,  my  bankers  had  got 
together  with  my  enemies  and  made  a  deal  to  sell  me  out! 

"Clarke  got  Tinker  on  the  'phone,  and  I  said:  *Mn  Tinker, 
Clarke  tells  me  that  last  Monday  you  had  met  my  banking  group, 
and  that  you  reached  an  agreement  with  them  that  they  would 
be  willing  to  take  50  per  cent  of  the  financing.  Is  that  correct, 
and  with  whom  did  you  have  that  understanding ?*  He  said: 
'I  have  had  that  understanding  with  your  group,  and  particularly 
with  Walker/  I  thanked  him,  and  called  Walker  at  his  home* 
I  said,  *I  am  selling  out  I  have  been  arguing  here  for  three 
hours  to  get  for  you  75  per  cent  of  the  financing  as  I  promised. 
I  just  talked  to  your  friend  Tinker,  and  he  tells  me  yon  made 
an  agreement  with  him  Monday  whereby  you  agreed  that  yo® 
would  accept  50  per  cent  of  the  financing/  He  said  that  was 
correct — but  urged  me  to  hold  out  for  75  per  cent  anyway]  I 
said  all  right,  and  hung  up  the  receiver,  and  dipped  my  pen  in 
the  ink  and  immediately  wrote  m  the  50  per  cent  basis/* 

The  contract  was  drawn  without  the  provision  for  20  per  cent 
participation  by  W.  F.  Clarke  was  making  a  desperate  effort  to 
talk  him  out  of  that  idea.  "Here/'  said  Clarke,  "your  bankers 
have  50  per  cent,  and  our  bankers  have  50  per  cent,  and  where 
are  you  going  to  get  your  20  per  cent?"  But  the  tough  and 
tenacious  Fox  meant  to  have  this  "gravy/7  bankers  or  no  bankers, 
and  for  that  reason  he  did  not  mean  to  sign  the  contract  as  it 
stood.  He  sought  for  a  pretext. 

"I  insisted  that  the  contract  be  read  to  Samuel  Untennyer. 
We  called  him  on  long  distance  telephone,  and  his  son  proceeded 
to  read  the  contract  to  him,  line  for  line.  There  was  a  discussion 


300     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

between  his  son  and  himself.  He  was  asking  for  many  correc- 
tions and  additions  to  be  made.  It  was  clear  to  me  that  Samuel 
Untermyer  was  not  satisfied  with  the  contract,  was  not  satisfied 
that  it  had  all  that  it  should  have.  I  felt  that  this  was  not  the 
proper  manner  of  closing  a  transaction  of  this  magnitude,  with 
the  terms  of  the  agreement  being  discussed  over  the  telephone. 
I  announced  to  Clarke  that  Untermyer  asked  for  the  privilege  of 
reading  the  contract;  he  would  be  in  New  York  early  in  the 
afternoon,  and  would  promptly  start  reading  it. 

"Clarke  thought  there  was  no  occasion  for  the  old  man  read- 
ing this  contract.  His  son  had  drawn  it,  he  had  read  it  to  his 
father,  the  contract  contained  all  of  the  things  we  had  expressed 
during  the  night,  and  the  contract  must  now  be  signed.  I  can 
visualize  the  scene  of  that  room  just  as  though  it  were  here  now. 
We  were  all  seated  with  Clarke  having  his  back  to  the  door,  his 
face  to  these  lawyers  who  had  listened  all  night  and  who  were, 
now  getting  his  ultimatum.  He  said :  'I  knew  darn  well  we  were 
wasting  this  night.  I  knew  darn  well  you  never  intended  to  sell 
these' shares.  I  have  conceded  you  every  request  you  made  during 
the  night.  I  felt  I  was  giving  you  all  the  rope  you  wanted  with 
which  to  hang  yourselves,  and  now  that  you  refuse  to  sign  the 
contract,  the  deal  is  off' — and  out  he  darted  through  the  door. 

"He  left  the  entire  meeting  flabbergasted :  Alvin  Untermyer 
who  was  so  anxious  to  consummate  this  transaction,  for  he  had 
remembered  the  Japanese  meeting,  and  was  urging  that  I  sell 
out;  and  Albert  Greenfield,  who  was  there  all  night,  and  who 
had  seen  the  return  of  his  $10,000,000  to  the  Bankers'  Securities 
Corporation.  Greenfield  had  stayed  in  this  room  twenty-four 
hours,  so  as  to  consummate  the  deal,  and  now  he  saw  Clarke 
dart  out,  and  you  can  well  imagine  his  attitude.  I  remembered 
then  clearly  the  words  of  my  daughter  of  nine:  'What's  the  use 
of  having  a  head  if  you  lose  it  just  when  you  need  it  the  most?' 
I  said :  'Let's  fold  up  our  papers  and  go  home.  I  am  perfectly 
satisfied  now  that  the  deal  has  fallen  through/ 

"Samuel  Untermyer  was  presently  informed  that  the  deal 
was  off,  and  he  called  up  Mrs.  Fox,  apologizing  profusely.  He 
hoped  he  had  not  been  the  cause  of  the  breaking  off  of  lie  deal 
that  had  been  worked  out  in  the  twenty-four  hours;  he  had 
insisted  that  the  contract  be  held  for  his  reading  as  a  matter  of 


THE  JAPANESE  MEETING  301 

precaution  to  me.  Mrs.  Fox  up  to  this  time  hadn't  known  the 
deal  had  been  called  off.  I  had  'phoned  her  every  hour  during 
the  night,  telling  her  of  the  progress,  but  I  had  not  'phoned  her 
when  the  contract  came  to  an  end.  I  thought  I  could  best  explain 
it  to  her  when  I  arrived  home.  But  when  we  got  there  she 
knew  all  about  it.  Samuel  Untermyer  had  just  told  her. 

"I  said:  What  did  you  say  to  him?  What  reply  did  you 
make  ?'  She  said :  'I  told  him  not  to  worry  about  it.  Mr.  Fox 
didn't  want  to  sign  it.  If  he  had  wanted  to  sign  it,  there  is  noth- 
ing that  Mr.  Untermyer  could  have  done  to  prevent  him.  He 
must  have  had  another  reason,  other  than  the  fact  that  Mr.  Unter- 
myer wanted  to  read  it.'  I  said :  'How  did  you  know — how  did 
you  guess  that  ?'  She  said :  'Well,  didn't  you  have  another  rea- 
son?' I  said:  'Yes.  During  the  night  Clarke  talked  me  out  of 
my  20  per  cent  participation.  There  was  no  way  of  my  getting 
back  to  it  in  this  conference.  That  meeting  had  to  break  up  and 
a  new  one  held  to  secure  this  participation,  which  I  hope  will 
net  me  a  substantial  profit/ 

"I  went  to  bed.  Greenfield  went  to  bed.  Alvin  Untermyer 
went  home.  I  told  Greenfield  that  if  he  were  awake,  I  would 
be  glad  to  see  him  at  my  home  at  three  in  the  afternoon,  I  knew 
the  Twentieth  Century  train  left  New  York  at  2:45.  I  had 
a  man  down  at  the  Grand  Central  station  to  see  if  Clarke 
would  keep  his  promise  to  go  back  to  Chicago  on  that  train.  The 
hour  came,  and  my  man  'phoned  and  said  Clarke  had  not  taken 
the  train.  At  3  o'clock  Greenfield  returned.  I  said :  'That  fellow 
Clarke  didn't  go  back  to  Chicago.  He  didn't  call  the  deal  off.  He 
is  right  across  the  street/  I  live  at  270  Park  Avenue,  and  Clarke 
at  277  Park  Avenue. 

"I  hadn't  told  Greenfield  during  the  night  that  Clarke  had 
talked  me  out  of  my  20  per  cent  participation.  When  I  told 
Greenfield  about  it,  he  said:  'Of  course  you  were  right.  He 
hasn't  any  right  to  charge  you  with  breaking  up  this  deal.  He 
broke  it  up.  I  will  go  right  across  the  street  and  see  him/  He 
found  Clarke  home,  and  came  back  in  an  hour,  and  Clarke  said : 
'All  right,  if  you  will  sign  the  contract,  I  will  give  you  a  letter 
giving  you  the  20  per  cent  participation/ 

<rWe  waited  until  Samuel  Untermyer  arrived  late  that  after- 
noon to  read  the  contract.  I  said  to  Untermyer :  'Now  before  we 


302     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

sign  the  contract,  be  sure  that  you  have  a  perfect  arrangement, 
whereby  these  companies  are  going  to  pay  you  the  million  dollars 
that  I  had  arranged  with  you/  Untermyer  went  over  to  Clarke's 
home  with  Greenfield  and  there  discussed  his  million  dollar  fee, 
with  Clarke  agreeing  to  pay  it.  I  insisted  that  that  be  done. 
I  felt  that  Untermyer  had  earned  his  fee  that  I  had  arranged 
with  him.  He  had  carried  out  his  part  of  the  bargain,  and  pre- 
vented these  corporations  from  going  into  the  hands  of  the 
receivers. 

"Of  course  the  contract  contained  a  paragraph  that  Clarke 
assumed  the  payment  of  all  my  lawyers*  fees,  regardless  of  the 
number  that  I  had.  That  all  became  necessary  ia  this  picture, 
because  of  the  conspiracy  of  Clarke  and  the  Telephone  Company; 
none  of  it  became  necessary  because  of  any  act  of  mine. 

*  We  returned  to  Untermyer's  home  later  that  night  Unter- 
myer insisted  that  the  contract  could  not  be  signed  until  after 
the  stroke  of  12.  This  was  Sunday,  and  no  contract  would 
be  legal  until  at  least  one  minute  past  12  o'clock.  It  would  have 
to  be  Monday  morning.  He  made  this  announcement  around  11 
o'clock.  We  all  waited  for  the  clock  to  point  to  12.  I  sug- 
gested that  in  view  of  the  importance  of  the  deal  we  wait  until 
ten  or  fifteen  minutes  past  12 — perhaps  the  watch  we  were  going 
by  was  not  keeping  accurate  time.  So  sometime  betweeaa  five  and 
ten  mintites  past  12,  this  contract  was  finally  signed* 


REEL  TWENTY-FIVE 
CAPTAIN   K1DD 

AT  last  the  enemies  of  our  Fox  have  accomplished  their  pur- 
pose ;  they  have  got  his  voting  shares  away  from  him,  and  are 
the  masters  of  his  companies.  Six  months  of  desperate  struggle, 
with  every  kind  of  pretense  and  chicanery  that  highly  trained 
experts  can  invent,  and  they  have  won.  Now  we  shall  see  just 
what  their  purpose  was,  and  how  sincere  were  their  fine  pro- 
fessions of  altruism  and  dignity. 

The  companies  now  have  a  new  head,  and  that  is  Harley  L. 
Clarke  of  Chicago.  We  have  already  met  the  gentleman,  but 
inasmuch  as  he  has  become  so  very  important,  let  us  go  back,  and 
remind  ourselves  that  he  first  came  to  W.  F.  with  a  letter  of 
introduction  from  Harry  Stuart,  which  Stuart  afterwards  told 
W.  F.  he  didn't  really  mean.  Said  Stuart :  "If  I  know  that  bird, 
he  will  want  more  than  that  before  long/'  And  sure  enough,  the 
"bird"  did  want  more,  and  persuaded  W*  F.  to  go  in  50-50  on 
Fox  Grandeur. 

W.  F.  tells  me  of  a  German  friend  who  came  to  this  country, 
and  was  to  meet  Clarke,  and  was  asked  to  form  a  judgment  of 
Clarke's  character,  and  reported:  "Er  ist  ein  Actienhaendler;" 
he  is  a  share-dealer.  A  rather  short  man,  stockily  built,  with  a 
round  sort  of  moon-face.  Says  W.  F. :  "When  he  talks  to  you, 
he  rarely  looks  at  you.  He  has  a  habit  of  indicating  to  you  how 
clever  he  is ;  and  also  he  has  a  peculiar  habit  of  snorting.  I  don't 
think  there  is  anything  wrong  with  his  nostrils  or  lungs,  it  is  a 
nervous  habit,  and  usually  comes  after  he  has  made  a  point.  He 
is  the  type  of  fellow  it  is  easy  to  like.  He  has  made  himself 
popular.  He  is  not  the  type  of  man  that  you  can  offend.  He  will 
take  anything.  He  knows  that  I  don't  like  him,  but  he  has  never 
given  any  indication  of  resenting  it." 

Six  years  back,  according  to  the  word  of  his  lawyer,  Harley 

303 

21 


304     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Clarke  had  been  "broke."  In  six  years  he  had  acquired  huge 
utility  companies  at  home  and  abroad.  Wiggin,  his  partner,  and 
a  chain  of  bond-houses — Pynchon,  Hammons,  West — had  made 
huge  fortunes  out  of  his  deals,  and  expected  to  make  more. 
Clarke  was  president  of  the  Utilities  Power  &  Light  Corporation, 
and  had  Insull  for  a  partner.  It  was  a  $500,000,000  company, 
controlled  in  the  most  extraordinary  way,  by  three  shares  of  vot- 
ing stock,  the  total  market  value  of  which  was  $9. 

You  can  judge  from  this  that  Clarke  has  no  conscientious 
scruples  against  voting  shares.  We  have  heard  the  high-priced 
lawyers  denouncing  the  wickedness  of  the  Fox  for  controlling 
his  companies  with  voting  shares  representing  only  5  per  cent  of 
the  outstanding  stock — perhaps  $2,000,000  of  market  value  con- 
trolling $40,000,000.  But  here  is  Clarke  with  $9  controlling  half 
a  billion!  Also  Clarke  has  his  General  Theatres  Equipment  Cor- 
poration, controlled  by  three  shares  of  stock,  a  trusteeship  with 
Clarke  and  two  of  his  men. 

This  last  named  concern  has  grown  out  of  Clarke's  manufac- 
ture of  projection  machines.  He  has  taken  his  International 
Projector  Company,  and  merged  it  into  a  huge  concern  called 
National  Theatres  Supply,  and  in  turn  he  has  merged  this  into 
a  still  bigger  concern,  General  Theatres  Equipment,  which  con- 
trols everything  in  the  field.  1,800,000  shares  of  this  concern 
were  issued ;  their  high  point  was  $66  a  share,  a  total  of  $120,- 
000,000.  1,400,000  shares  were  kept  for  Clarke  himself.  Says 
W.  R: 

"General  Theatres  Equipment  was  nothing  more  nor  less  than 
a  bag  of  wind ;  the  real  intrinsic  value  of  those  shares,  in  accord- 
ance with  the  assets  of  the  companies,  was  not  more  than  $1  a 
share.  It  was  Clarke's  idea  in  buying  the  Fox  companies  to  give 
a  real  substance  and  foundation  to  General  Theatres  Equipment. 
It  was  this  concern,  and  not  Clarke  personally,  which  bought  my 
voting  shares,  and  it  was  in  the  name  of  this  concern  that  the 
new  financing  was  done." 

Of  course  the  news  of  the  deal  was  in  the  papers  at  once, 
and  very  soon  Harley  Clarke  announced  his  plans  for  financing. 
In  so  doing  he  revealed  what  he  had  been  after  all  through  those 
six  months,  while  he  had  been  sending  A.  C.  Blumenthal  and  Will 
H.  Hays  and  other  eminent  negotiators  to  the  Fox.  Then  he  and 


CAPTAIN  K1DD  305 

his  bankers  and  his  lawyers  had  made  pretenses,  but  now  they 
told,  in  plain  figures.    Money  talks ! 

We  are  about  to  enter  the  top-most  realms  of  high  finance. 
I  wish  I  could  make  it  simple  and  easy  but  there  is  no  way  to  do 
so,  for  the  reason  that  those  who  contrive  these  financial  laby- 
rinths deliberately  make  them  difficult  of  understanding.  About 
all  I  can  say  is  that  there  is  no  need  for  you  to  follow-  all  these 
twistings  and  windings,  and  unless  you  are  a  specialist  in  finan- 
cial tricks,  you  can  run  your  eye  over  the  pages  to  get  the  main 
point,  which  is  the  amount  of  profits  which  Clarke  and  his  crowd 
took  from  the  Fox  stockholders  and  Investing  public. 

You  will  remember  that  Fox  Theatres  had  purchased  a  total 
of  660,900  shares  of  the  Loew  company,  paying  them  $75,000,000. 
W.  F.  has  been  accused  both  in  the  newspapers  and  in  court  of 
having  committed  an  act  of  absurd  extravagance,  because  the 
block  of  400,000  shares  purchased  from  the  Loew  estate  cost  far 
more  than  the  market  price  at  the  time.  The  critics  overlooked 
or  concealed  the  fact  that  this  block  carried  control  of  the  com- 
pany, and  you  cannot  buy  control  at  the  market  price;  the  moment 
you  start  to  buy  control,  you  force  the  price  up  to  the  skies. 

Clarke  has  now  decided  that  Fox  Film  is  to  purchase  the 
Loew  shares  from  Fox  Theatres,  paying  the  full  cost  price.  The 
latter  concern  had  borrowed  $17,000,000  from  the  former  .for  the 
making  of  the  original  purchase,  and  that  sum  is  now  to  be  wiped 
out.  In  addition,  Fox  Film  will  pay  Fox  Theatres  $10,000,000 
in  cash  and  $48,000,000  in  the  form  of  1,600,000  shares  of  Fox 
Film  A  stock  at  $30  per  share.  Clarke  will  then  purchase  these 
1,600,000  shares  from  Fox  Theatres,  paying  $48,000,000  in  cash, 
and  with  this  amount  Fox  Theatres  will  pay  off  its  obligations : 
$15,000,000  plus  interest  to  the  Telephone  Company;  $12,000,000 
plus  interest  to  Halsey,  Stuart;  $10,000,000  plus  interest  to 
Greenfield's  Philadelphia  company;  and  the  balance  to  various 
bankers. 

That  is  all  very  pleasant  and  friendly;  everybody  gets  his 
money  and  is  happy.  But  why  that  sleight-of-hand  of  having 
Fox  Film  take  the  Loew  stock,  in  exchange  for  its  shares  issued 
to  Fox  Theatres?  If  it  is  desired  to  have  Fox  Film  own  the 
Loew  stock,  why  not  sell  Fox  Film  stock  to  the  public,  and  use 
the  money  thus  obtained  to  buy  the  Loew  shares?  The  answer 


306     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

to  that  tells  you  what  this  whole  fight  has  been  about.  The  great 
financier  from  Chicago  and  his  partner,  the  great  Wiggin  of 
Chase  Bank,  have  a  trick  in  mind,  whereby  they  will  take  unto 
themselves  the  prosperity  of  the  Fox  companies,  and  make  the 
investing  public  pay  them  two  and  a  half  times  the  price  they  are 
paying  W.  K  for  his  voting  shares. 

Yes,  they  are  ousting  the  man  who  has  had  the  bad  habit  of 
sharing  his  profits  with  his  stockholders.  There  is  to  be  a  new 
deal  now,  and  prosperity  is  to  be  for  the  bankers,  In  October, 
1929,  the  shares  of  Fox  Film  were  costing  over  $100  in  the  mar- 
ket, and  by  six  months  of  lawsuits  and  injunctions  and  similar 
actions,  plus  slanders  and  scandals,  they  have  been  beaten  down 
to  a  low  price  of  $16  on  January  3,  1930.  But  the  bankers  know 
perfectly  well  the  true  value  of  those  shares,  as  represented  by 
the  assets;  they  know  that  the  shares  have  a  book  value  of  not 
less  than  $75.  They  know  that  as  soon  as  word  goes  out  that  the 
great  Chase  Bank  of  New  York  and  the  great  utilities  magnate 
of  Chicago  have  taken  charge  of  the  Fox  companies,  the  shares 
will  start  to  rise.  There  is  no  gamble  whatever  about  it.  Within, 
three  weeks  after  the  ousting  of  Fox,  Fox  Film  has  gone  to  $57. 
And  who  is  going  to  get  the  benefit  of  this  ?  Are  the  stockholders 
and  the  investing  public  going  to  get  it?  The  answer  is,  not  on 
the  life  of  Harley  L.  Clarke  and  Albert  H.  Wiggin ! 

Under  the  terms  of  the  Fox  Film  stock  issues,  the  share- 
holders had  what  is  called  a  pre-emptory  right  to  new  issues: 
that  is  to  say,  whenever  it  was  proposed  to  increase  the  capital  of 
the  company,  the  stockholders  had  the  first  chance  to  take  the  new 
shares  at  the  price  of  offering.  There  was  no  way  to  get  around 
that — at  least,  there  wasn't  supposed  to  be,  but  what  are  Wall 
Street  lawyers  for?  The  idea  of  letting  the  stockholders  pur- 
chase for  $30  shares  which  were  going  to  sell  for  $57  in  three 
weeks — such  an  idea  is  absolutely  intolerable  to  the  Clarkes  and 
the  Wiggins  of  Wall  Street. 

So  they  invented  the  shrewd  little  trick  above  mentioned. 
Fox  Film  did  not  offer  the  shares  for  sale ;  no,  it  turned  them 
over  to  Fox  Theatres,  as  part  of  the  price  of  the  Loew  shares, 
and  Fox  Theatres  then  sold  them  to  Harley  L.  Clarke  and  his 
financiers!  Just  as  simple  as  that!  What  it  meant  was  that 
Clarke  and  the  rest  of  the  financiers  had  a  profit  of  $27  per  share, 


CAPTAIN  K1DD  307 

or  more  than  $43,000,000  on  the  transaction.  Of  this  they  paid 
a  total  of  $18,000,000  to  the  Fox,  and  the  rest  was  a  clean  net 
profit  of  $25,000,000  on  the  whole  deal.  And  that  was  what  they 
had  been  after  for  six  months !  That  was  what  the  high-priced 
lawyers  had  been  arguing  for,  and  being  so  very  dignified  and 
pious  about! 

At  least  that  was  part  of  It;  we  shall  see  in  just  a  moment 
what  else.  First  let  us  hear  the  story  of  W.  F/s  share  in  that 
particular  bit  of  financiering  magic : 

"My  20  per  cent  participation  had  now  become  a  sort  of 
important  document.  I  had  a  letter  from  Clarke  providing  that 
I  participate  in  any  financing  done  by  either  of  the  Fox  com- 
panies. Twenty  per  cent  of  1,600,000  shares  of  stock  gave  me  a 
right  to  purchase  320,000  of  these  shares,  at  $30  a  share,  or 
$9,600,000.  Nor  was  there  any  stipulation  in  this  letter  that  after 
I  had  purchased  them,  I  wouldn't  have  the  right  to  sell  them ;  I 
wasn't  restricted.  320,000  shares  at  $57  per  share  is  $18,240,000. 
After  Fox  delivered  his  check  for  $9,600,000,  he  would  get  shares 
which,  if  the  market  held  up,  he  could  sell  for  $18,240,000.  It 
was  well  worth  not  signing  the  contract  that  Sunday  morning  at 
10  o'clock,  but  making  a  new  arrangement  Sunday  afternoon  and 
evening,  and  signing  the  contract  on  Monday ! 

"Of  course,  we  demanded  our  320,000  shares  of  stock;  but 
Clarke  said  we  weren't  entitled  to  that  much.  He  said :  *I  didn't 
give  you  a  letter  in  which  you  had  a  20  per  cent  participation. 
The  letter  I  gave  you  was  that  you  would  have  a  10  per  cent 
participation,  and  that  I,  Clarke,  would  do  everything  in  my 
power  to -get  you  10  per  cent  more/  That  was  right.  That's 
how  the  letter  read.  But  he  didn't  have  to  exert  much  power  to 
give  me  the  other  10  per  cent.  He  was  in  control  of  the  situation, 
and  therefore  I  had  construed  the  letter  to  mean  that  I  was 
entitled  to  320,000  shares  of  stock.  Clarke  had  told  me  that  of 
the  1,600,000  shares  of  stock  required,  540,000  were  distributed 
among  all  the  bankers.  Clarke's  company  really  had  retained 
only  1,160,000  shares,  and  so  he  said  I  was  entitled  to  10  per  cent 
of  1,160,000. 

"I  decided  I  would  get  legal  advice,  and  have  someone  con- 
strue this  letter.  Samuel  Untermyer  contended  that  the  maxi- 
mum shares  I  was  entitled  to  was  20  per  cent  of  1,160,000;  that 


308     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

if  Clarke  had  to  give  540,000  shares  away,  I,  being  associated 
with  Clarke  in  this  enterprise,  would  have  to  give  my  shares 
along  with  it.  Reass  contended  that  I  was  entitled  to  320,000 
shares  of  stock.  We  got  other  legal  opinions.  A  firm  in  Phila- 
delphia thought  we  were  entitled  to  about  260,000  shares  of 
stock.  I  visited  George  Wharton  Pepper,  one  of  the  outstanding 
lawyers  in  Philadelphia,  described  this  thing  to  him,  and  he 
thought  I  was  entitled  to  320,000  shares.  While  this  talk  was 
going  on,  the  stock  was  fluctuating  between  $50  and  $57.  We 
had  advised  Clarke  we  were  making  a  tender  of  $9,600,000  and 
we  wanted  320,000  shares  of  stock.  This  controversy  was  con- 
tinued until  August  13,  and  finally  settled  by  General  Theatres 
Equipment  paying  me  $3,000,000  for  the  claim  that  Clarke  had 
given  rne." 

In  order  to  get  part  of  the  $48,000,000  it  was  paying  in  cash 
to  Fox  Theatres,  General  Theatres  Equipment  sold  $30,000,000 
of  its  own  bonds.  This  issue  was  underwritten  by  the  Chase 
Bank  and  by  Hammons  &  Company  of  Boston,  a  great  invest- 
ment house.  The  commission  on  this  deal  was  three  points,  or 
$900,000.  W.  F,  does  not  know  exactly  what  was  the  relation- 
ship of  the  Chase  Bank  to  this  deal ;  he  only  knows  that  the  cer- 
tified check  for  $15,000,000  which  he  got  from  Clarke  was  a 
check  on  the  Chase  Bank;  and  a  year  later,  when  the  bank  had 
quarreled  with  Clarke,  Clarke  told  him  that  Wiggin  had  been  his 
full  partner,  and  that  the  two  of  them  had  been  using  the  funds 
of  the  Chase  Bank  for  the  Fox  deal. 

The  second  form  of  financing  was  that  General  Theatres 
Equipment  sold  433,000  shares  of  its  common  stock  at  $48.50 
per  share.  This  issue  was  underwritten  by  two  great  investment 
firms,  Pynchon  &  Company  of  New  York,  and  West  &  Company 
of  Philadelphia,  with  the  Chase  Bank  again  holding  the  bag,  as 
they  call  it.  The  commission  of  the  selling  group  on  this  deal 
was  $3  per  share,  or  $1,300,000.  As  the  selling  group  managers ' 
were  also  members  of  the  syndicate  which  purchased  these  shares, 
it  is  to  be  supposed  that  another  large  profit  was  made.  You  see 
how  these  financiers  buy  something  with  their  right  hand  and 
sell  it  to  their  left,  and  thus  they  make  two  profits,  and  the  first 
is  not  disclosed. 

These  two  financial  jobs  netted  General  Theatres  Equipment 


CAPTAIN  KIDD  309 

the  $48,000,000  paid  to  Fox  Theatres  for  the  1,600,000  shares  of 
Fox  Film  stock.  A  total  of  440,000  of  these  shares  went  to  the 
syndicate  which  underwrote  the  deal.  G.  T.  E.  got  1,160,000 
shares.  And  when  they  came  to  list  the  shares  with  the  New 
York  Exchange,  as  required  by  the  rules,  they  listed  only  1,000,- 
000  shares.  The  "application  to  list"  states  that  the  full  price  was 
paid  for  1,000,000  shares  of  Fox  Film;  and  the  rest  were  gone — 
slipped  into  somebody's  pocket ! 

Nor  is  that  all.  The  condensed  balance  sheet  of  General 
Theatres  Equipment,  issued  at  the  end  of  1929,  shows  1,955,000 
shares  of  stock  in  the  hands  of  the  public.  The  "pro  forma" 
balance  sheet,  which  covers  the  acquisition  of  the  Fox  companies, 
states  that  there  are  now  2,847,000  shares  issued.  That  means 
an  increase  of  892,000  shares.  But  only  433,000  new  shares  were 
accounted  for  by  the  Fox  deal ;  so  it  appears  that  459,000  shares 
were  issued  without  being  accounted  for.  To  be  sure,  there  were 
$6,000,000  in  bonds  retired,  and  these  may  have  been  converted 
into  stock.  That  might  account  for  150,000  or  200,000  shares. 
But  there  is  left  somewhere  between  220,000  and  270,000  shares, 
a  matter  of  $10,000,000  or  $15,000,000,  which,  so  W.  F.  declares, 
disappeared  without  trace. 

The  generous  bankers  were  determined  to  supply  the  Fox 
companies  with  great  quantities  of  money;  the  public  was  in  a 
buying  mood,  the  bankers  in  a  selling  mood,  and  Harley  Clarke 
would  know  what  to  do  with  the  money.  So  the  Fox  Film  Cor- 
poration proceeded  to  issue  $55,000,000  worth  of  one-year  notes. 
This  time  Halsey,  Stuart  and  the  Chase  Bank  did  not  call  in  any 
outsiders  to  share  in  the  financing.  They  had  some  kind  of  fight 
with  the  Lehman  group — W.  F.  does  not  know  the  inside  story, 
but  only  the  results,  that  each  of  the  group,  Lehman  Brothers, 
Bancamerica-Blair,  and  Dillon,  Read  &  Company,  received 
$1,600,000  in  cash  without  performing  any  further  service.  The 
$55,000,000  worth  of  notes  were  underwritten  and  offered  by 
Halsey,  Stuart  and  the  Chase  Bank,  for  a  commission  of  $680,000. 
In  addition  to  that,  according  to  the  "application  list,"  the  bankers 
got  a  bonus  in  the  form  of  warrants  to  purchase  300,000  shares 
of  Fox  Film  at  $35  at  any  time  during  the  next  three  years.  If 
they  exercised  this  right  three  weeks  after  the  deal  was  made, 
they  had  a  profit  at  the  market  price  of  $22  per  share,  or  $6,600,- 


310     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

000.  Of  course  if  they  waited  for  further  rises,  they  lost  out. 
I  am  informed  that  the  Telephone  Company  had  to  take  $8,000,- 
000  worth  of  these  notes,  and  that  they  lost  out. 

The  best  way  of  telling  this  story  will  be  to  follow  these  finan- 
cial deals  through  to  the  end,  even  though  it  involves  skipping 
over  other  important  matters.  All  these  financiers,  operating  in 
the  spring  of  1930,  were  certain  that  prosperity  was  coming  back, 
and  that  they  were  going  to  have  another  grand  and  glorious 
"bull  market."  Instead,  they  had  more  panics,  slumps,  and  a 
seemingly  permanent  depression.  The  Fox  had  got  away  with  at 
least  a  part  of  his  skin— $15,000,000  in  actual  cash,  $3,000,000  in 
notes  from  Clarke,  and  the  promise  of  a  check  from  Fox  Film 
to  the  amount  of  $41,666.66%  per  month  for  five  years.  But  the 
men  who  had  hung  him  up  and  skinned  him — well,  let  him  tell 
the  tale,  and  why  he  has  such  an  abiding  faith  in  a  God  Almighty 
who  looks  out  for  the  punishing  of  his  enemies ! 

First,  the  great  firm  of  Hammons  &  Co.  of  Boston,  which 
joined  the  Chase  Bank  in  underwriting  $30,000,000  worth  of 
General  Theatre  Equipment  bonds.  Says  W.  F. :  "There  evi- 
dently was  not  a  ready  market  for  these  bonds.  There  may  have 
been  a  resentment  by  the  investors  against  the  attitude  of  Halsey, 
Stuart,  Clarke,  and  the  Chase  Bank  as  against  Fox.  The  result 
was  that  the  syndicate  met  with  reverses,  and  a  large  percentage 
of  these  bonds  were  never  purchased  by  the  public.  The  syndi- 
cate had  the  bonds  hypothecated  with  their  banks,  and  when  these 
bonds  declined  in  value,  they  were  asked  to  put  up  more  margin, 
and  when  Hammons  &  Co.  could  furnish  no  more  margin,  they 
were  obliged  to  declare  themselves  bankrupt*  It  has  been  told 
to  me  that  the  Chase  Bank  now  owns  more  than  one-half  of  those 
bonds.  The  members  of  the  great  firm  of  Hammons  &  Co.  of 
Boston  were  pauperized  by  that  deal." 

And  second,  the  deal  for  the  marketing  of  433,000  shares  of 
General  Theatres  Equipment  stock  at  $48.50  a  share:  the  Chase 
Bank  "held  the  bag"  for  this  also,  and  two  great  firms  were 
wrecked  by  it.  One  was  West  &  Co.  of  Philadelphia,  one  of  the 
oldest  banking-houses  in  the  country,  having  been  organized  one 
year  after  the  signing  of  the  Declaration  of  Independence.  The 
other  was  Pynchon  &  Co.  of  New  York.  This  firm  had  twenty- 
eight  partners,  all  of  them  men  of  wealth  and  most  of  them  men 


CAPTAIN  KIDD  311 

of  family.  The  firm  had  $20,000,000  capital,  and  at  the  opening 
of  1930  found  itself  with  $20,000,000  of  surplus  which  was 
divided  among  the  partners.  But  then  came  this  deal  in  General 
Theatres  Equipment  stock,  and  it  was  a  terrible  trap. 

"General  Theatres  Equipment  had  already  outstanding  some 
2,000,000  shares  of  stock,  which  was  pegged  at  48%  a  share; 
and  if  433,000  additional  shares  were  to  be  distributed  to  the 
public,  the  market  would  have  to  be  maintained  at  all  hazards. 
General  Theatres  Equipment,  Harley  Clarke,  Chase  Bank,  Pyn- 
chon  &  Co.,  West  &  Co.  were  the  syndicate  that  did  the  stock- 
market  manipulating.  As  the  general  market  kept  declining,  the 
job  of  pegging  grew  harder.  A  meeting  of  the  Pynchon  firm  was 
called  and  each  of  the  partners  was  asked  to  repay  the  $20,000,- 

000  that  had  been  divided  among  them.    They  did  put  it  back. 

1  learned  from  fairly  reliable  sources  that  Pynchon,  the  head  of 
this  firm,  had  many  years  before  presented  his  daughter  with  an 
elegant  home  on  Long  Island.     When  this  difficulty  came  he 
requested  her  to  permit  him  to  raise  a  $300,000  mortgage  against 
this  home,  which  he  did.   When  the  final  blow  came,  the  $20,000,- 
000  of  capital,  the  $20,000,000  of  surplus,  the  money  secured 
by  the  mortgage  on  this  property,  all  was  wiped  out,  and  there 
was  a  liability  over  and  above  assets  of  thirty  or  forty  million 
dollars. 

"I  am  told  that  the  day  it  was  announced  that  Pynchon  &  Co. 
had  been  stricken  from  the  membership  of  the  New  York  Stock 
Exchange  and  their  dealings  no  longer  could  pass,  this  incident 
occurred :  One  of  Pynchon's  partners,  by  the  merest  chance,  had 
made  a  provision  for  an  annuity,  by  which  he  was  to  receive 
$20,000  a  year;  and  now  Pynchon  put  his  hand  in  his  pocket, 
drew  out  of  it  a  five-dollar  bill  and  two  singles,  and  calling  this 
man  by  his  first  name,  said:  'This  is  all  I  have  left  in  the  world. 
From  now  on  it  will  be  your  responsibility  to  support  me/  That's 
how  thoroughly  Clarke  had  done  this  job  and  ruined  these  men. 
All  were  heavy  borrowers  of  the  Chase  Bank,  and  the  Chase 
Bank  took  it  on  the  chin." 

And  now  for  the  greatest  bank  in  the  world,  and  its  greatest 
chairman,  Albert  H.  Wiggin,  who  had  gone  in  with  his  partner, 
Harley  L.  Clarke,  to  take  over  the  Fox  companies.  There  were, 
you  recall,  $55,000,000  worth  of  one-year  gold  notes,  issued  by 


312     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Fox  Film  and  underwritten  by  Chase  Bank  and  Halsey,  Stuart 
&  Co.  In  the  course  of  that  year,  Harry  Stuart  observed  how 
Harley  Qarke  was  running  the  companies,  and  he  had  time  to 
realize  that  this  was  the  same  Harley  Clarke  against  whom  he 
had  once  warned  the  Fox.  He  didn't  like  the  way  things  were 
going,  and  he  backed  out. 

"Long  before  the  first  year  had  expired  there  was  a  com- 
plete disagreement  between  Stuart  and  Qarke,  and  Stuart 
announced  to  the  Chase  Bank  that  unless  Clarke  was  removed 
from  control  of  these  companies,  the  firm  of  Halsey,  Stuart 
would  not  renew  the  $55,000,000  worth  of  notes.  The  Chase 
Securities  Corporation  defended  Clarke,  because  Albert  Wiggin 
always  was  a  partner  of  Qarke.  The  result  was  that  when  the 
year  rolled  around,  and  it  rolled  around  pretty  fast,  the  Chase 
Securities  Corporation  undertook  to  do  the  refinancing  of  the 
$55,000,000  without  the  aid  of  Halsey,  Stuart.  The  Chase  Bank 
then  was  obliged  to  refinance  this  money,  and  Fox  Film  in  April, 
1931,  sold  $35,000,000  worth  of  two  or  three-year  bonds.  The 
West  Coast  Theatres  Company  in  California  hypothecated  their 
stock,  and  the  Chase  Bank  loaned  against  it  $15,000,000;  another 
$10,000,000  was  raised  in  some  other  way;  the  total  was  about 
$60,000,000.  Subtracting  from  it  the  cost  of  the  financing,  this 
netted  the  company  enough  to  repay  the  $55,000,000  of  notes  sold 
a  year  previously. 

"The  activities  of  Halsey,  Stuart  in  driving  Fox  out  of  the 
picture,  putting  Qarke  in  his  stead,  and  then  deserting  Clarke, 
resulted  in  all  the  bonds  previously  sold  by  Halsey,  Stuart  for  the 
subsidiaries  of  Fox  Theatres  being  destroyed.  Here  are  $40,000,- 
000  worth  of. bonds,  which  were  worth  a  full  $40,000,000  in 
November,  1929,  and  the  market  value  of  these  bonds  today  is 
probably  less  than  $5,000,000.  Of  course,  that  doesn't  hurt  Hal- 
sey, Stuart  any,  because  it  was  not  their  money  that  was  invested, 
it  was  the  money  of  their  clients.  It  cost  the  clients  of  Halsey, 
Stuart  about  $35,000,000  to  give  Stuart  the  pleasure  of  knowing 
lie  had  driven  Fox  out  of  business. 

**With  the  retirement  of  Halsey,  Stuart  out  of  the  financing 
of  the  Fox  enterprise,  the  duty  and  obligation  to  keep  these  com- 
panies in  funds  fell  entirely  upon  the  shoulders  of  the  Chase 
Securities  Corporation.  This  concern  was  affiliated  to  the  Chase 


CAPTAIN  KIDD  313 

Bank,  and  the  say  as  to  how  it  should  be  conducted  and  run,  to 
whom  it  should  loan  its  money,  what  companies  it  should  finance, 
was  practically  in  the  hands  of  one  man,  Albert  Wiggin.  This 
resulted  in  Chase  Securities  and  Chase  Bank  having  almost  $100,- 
000,000  of  their  capital  tied  up  in  these  Fox  companies.  When 
Fox  controlled  the  companies,  it  gave  the  Chase  Bank  much 
worry  to  have  $400,000  tied  up  in  such  enterprises.  But,  now  that 
Fox  was  no  longer  a  part  of  these  companies,  it  was  a  pleasure 
for  Chase  Bank  and  Chase  Securities  to  have  $100,000,000  tied 
tip.  More  than  one-third  of  the  total  capital  of  the  largest  bank 
in  America  tied  up  in  one  enterprise,  owned  and  controlled  by 
three  shares  of  stock,  the  market  value  of  which  is  a  little  more 
than  a  dollar,  owned  by  Albert  Wiggin's  partner  and  buddy, 
Harley  Clarke  of  Chicago — that  is  a  perfectly  proper  piece  of 
business ! 

"When  the  Fox  was  captured  by  Wiggin  and  Clarke,  the 
7,200,000  shares  of  stock  of  the  Chase  Bank  had  a  market  value 
of  upwards  of  a  billion  dollars.  The  shares  were  more  than  $150 
a  share.  But  the  hunt  for  Fox  and  his  capture  was  not  kept  a 
secret.  Everybody  in  New  York  knew  about  it.  It  didn't  take 
long  for  everyone  throughout  the  nation  to  know  that  $100,000,- 
000  worth  of  capital  belonging  to  the  Chase  Bank  and  Chase 
Securities  was  tied  up  in  this  enterprise,  and  that  the  enterprise 
was  being  mismanaged  and  destroyed.  It  didn't  take  the  people 
of  New  York  long  to  know  that  with  the  crash  of  Hammons, 
West,  and  Pynchon,  the  Chase  Bank  was  materially  affected. 
No  one  talked  about  it  loudly,  for  Wiggin  was  almighty ;  but  It 
became  a  whispering  campaign.  What  does  the  Chase  Bank  want 
with  these  Fox  enterprises?  What  was  this  all  about?  And 
soon  these  Chase  Bank  shares  began  to  decline,  and  people  began 
to  withdraw  their  deposits. 

"In  April,  1930,  the  deposits,  capital  and  surplus  of  Chase 
Bank  had  reached  more  than  $2,000,000,000.  No  longer  were  the 
great  English  banks  to  be  the  largest  in  the  world — America  had 
taken  their  place  with  the  Chase  Bank.  But  today  we  find  that 
six  or  seven  hundred  million  dollars  have  been  withdrawn,  and  we 
find  the  shares  of  stock  which  had  market  value  in  1930  of  well 
over  a  billion  dollars,  today  are  worth  about  $175,000,000.  Eight 
or  nine  hundred  million  dollars  is  the  depreciation  of  those  shares! 


314     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

When  we  look  at  the  Chase  Bank's  capital  and  surplus  and  undi- 
vided profits  in  1930,  and  compare  them  with  the  figures  now,  we 
find  that  forty  or  fifty  million  dollars  have  been  taken  from  the 
surplus,  and  these  adventures  of  Albert  Wiggin  were  being  paid 
for  not  only  by  Wiggin,  but  by  the  stockholders  of  the  Chase 
Bank. . 

"You  will  recall  how  my  friend,  Colonel  Huston,  had  his 
Christmas  dinner  in  1929  with  Wiggin  at  his  home,  and  next  day 
Wiggin  sent  word  to  Huston  that  he  resented  the  interference  by 
the  administration  in  behalf  of  Fox.  Wiggin  was  mightier  than 
the  President  of  the  United  States  on  that  Christmas  day.  Chair- 
man of  the  board  of  the  largest  bank  in  America,  knowing  that 
he  must  depend  upon  favors  by  the  administration,  knowing  that 
the  administration  could  be,  and  probably  was,  its  largest  deposi- 
tory, knowing  that  his  bank  was  a  member  of  the  Federal  Reserve 
system,  he  yet  had  the  audacity  to  send  word  to  the  Chief  Execu- 
tive of  the  United  States:  *I  resent  your  interference  in  behalf 
of  Fox — mind  your  own  business  P  It  takes  a  lot  of  courage  to 
do  that.  Yes,  he  must  have  felt  his  power  as  the  Kaiser  did 
before  the  war !" 

This  was  spoken  by  William  Fox  in  the  spring  of  1932.  In 
January  of  1933,  as  this  book  is  going  to  the  printer,  the  great 
Albert  Wiggin  retires  from  the  Chase  Bank,  and  young  Rocke- 
feller's brother-in-law,  Winthrop  W.  Aldrich,  is  in  control 


REEL  TWENTY-SIX 
THE  BUSINESS  OF  LOOT 

WE  HAVE  followed  the  fortunes  of  the  Fox  financiers. 
Let  us  now  return  to  the  date  of  the  purchase,  and  follow 
the  inside  story  of  a  motion  picture  enterprise  under  the  man- 
agement of  a  public  utilities  magnate. 

Clarke  and  Wiggin,  controlling  the  B  shares  of  Fox  Film, 
and  Fox  Theatres,  turned  out  most  of  the  old  directors.  They 
kept  Sheehan ;  also  they  kept  the  Fox,  because  that  was  written 
in  the  bargain.  W.  F.  only  attended  one  directors*  meeting,  and 
could  never  get  word  when  another  was  to  be  held.  They  put 
in  three  stock  market  operators,  and  made  Harley  Clarke  presi- 
dent of  both  Fox  Film  and  Fox  Theatres. 

W.  F.  explains  to  me  again  and  again  that  he  did  not  take  a 
petty  attitude  towards  this  new  regime.  The  companies  still 
bore  his  name,  and  he  had  promised  the  old  stockholders  tfaat 
he  would  do  everything  he  could  for  them.  He  thought  he  was 
going  to  be  chairman  of  an  advisory  board,  and  was  really  going 
to  have  something  to  say.  He  was  so  sure  of  it  that  he  bought 
a  lot  of  Fox  stock,  and  got  stuck,  along  with  everybody  else. 

He  began  his  duties  at  once.  He  called  upon  Clarke,  and 
impressed  upon  him  the  great  importance  of  one  problem  in  the 
activities  of  his  companies — the  contracts  made  with  exhibitors 
for  the  use  of  film.  That  was  the  one  source  of  income  of  Fox 
Film  in  the  United  States,  and  if  that  was  impaired,  everything 
was  gene.  Says  W.  F.: 

"From  the  creation  of  Fox  Film  until  the  time  I  had  my 
accident  in  July,  1929,  it  was  not  possible  for  any  motion  pic- 
ture owner  i&  America  to  use  the  pictures  made  by  Fox  Film 
without  the  contract  that  gave  him  that  right  being  submitted 
to  me.  For  if  the  contracts  entered  into  were  not  properly  scru- 
tinized, passed  on,  and  approved,  it  would  be  a  perfectly  simple 

315 


316     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

matter  for  those  who  were  in  charge  of  creating  the  relationship 
between  theatre  owner  and  Fox  Film  to  enrich  themselves. 

"These  relationships  had  been  created  at  the  beginning  of 
Fox  Film.  Salesmen  were  engaged  and  dismissed,  film  exchange 
managers  were  hired  and  fired,  but  all  of  that  made  no  difference 
to  me.  I  knew  by  practical  experience  what  each  exhibitor 
throughout  the  United  States  could  afford  to  pay  for  the  use 
of  our  pictures,  and  it  was  my  job  to  see  that  an  equitable  con- 
tract was  made  by  Fox  Film  with  its  exhibitor  customers. 

"I  told  Clarke  of  the  importance  of  this  work;  I  explained 
to  him  that  unless  an  experienced  person  handled  that  depart- 
ment of  supervising  the  contractual  relationship,  there  would 
result  serious  difficulties  for  the  company.  I  told  him  how  I 
guarded  that  spot  in  our  business — the  heart  of  our  corporation. 
I  offered  to  assist  in  the  passing  on  these  contracts,  as  an  addi- 
tional duty  not  called  for  in  the  contract  between  Fox  Film  and 
myself.  I  described  to  Clarke  how  simple  it  would  be  for  sales- 
men and  exchange  managers  to  make  private  deals  with  exhib- 
itors, and  that  such  deals  would  be  made  if  the  sales  organization 
realized  that  the  person  who  had  safeguarded  the  company 
against  such  danger  was  no  longer  with  the  company.  I  was 
willing  to  protect  the  company  without  further  compensation, 
although  the  task  would  take  at  least  one-third  of  a  person's 
time. 

"There  is  no  system  at  present  known  by  which  you  can 
measure  what  the  fair  charge  should  be  for  the  use  of  pictures 
made  by  any  film  company  to  its  exhibitors.  It  is  different  from 
any  other  manufacturing  line  I  know  of ;  in  any  other  line  there 
is  a  standardized  price,  but  in  the  leasing  of  motion  pictures  to 
a  theatre  there  is  no  such  price.  Every  possible  and  conceivable 
condition  must  be  taken  into  account  in  establishing  this  rela- 
tionship; the  number  of  seats  a  theatre  has,  the  price  of  admis- 
sion, the  competition  that  it  has,  and  your  own  competition. 
There  are  so  many  ramifications  that  it  really  takes  almost  a 
life  study  to  enable  a  person  to  arrange  these  contracts  so  that 
they  will  be  equitable  both  to  the  theatre  owner  and  the  film 
leasing  company." 

And  how  did  the  utilities  magnate  from  Chicago  receive  these 
suggestions?  He  answered  that  he  understood  the  matter  very 


THE  BUSINESS  OF  LOOT  317 

well,  the  importance  of  these  contracts;  he  was  going  to  pass 
upon  them  himself.  W.  F.  remarks  sarcastically:  "Of  course 
he  must  have  thought  this  was  about  the  same  kind  of  job  as 
reading  a  gas  meter,  or  one  for  water  or  light."  W.  F.  is 
extremely  contemptuous  on  the  subject  of  readers  of  gas,  water 
and  light  meters  presuming  to  enter  the  business  of  manufac- 
turing motion  pictures  and  managing  theatres.  He  thinks  they 
are  quite  different  businesses,  and  every  time  he  finds  a  gas, 
water  or  light  man  making  a  mess  of  a  moving  picture  concern, 
he  exhausts  his  vocabulary  of  scorn.  He  tells  me  how  Clarke 
had  an  elaborate  study  made  of  the  two  Fox  companies,  and  all 
the  results  were  embodied  in  a  set  of  huge  volumes;  but  this 
information  stayed  in  the  volumes,  and  never  got  into  the  head 
of  any  executive. 

In  the  days  when  W.  F.  was  in  charge,  "it  was  the  law  that 
not  a  dozen  packages  of  pins  be  purchased  without  a  competitive 
bid."  Also  it  was  the  law  that  no  commission  was  paid  to  any- 
one, in  the  purchases  of  $30,000,000  worth  of  merchandise.  Says 
W.  F.:  "Up  to  the  end  of  my  regime,  no  manager  of  one  of 
these  theatres  had  power  to  buy  10  cents  worth  of  merchandise. 
It  was  all  purchased  at  the  home  office  by  what  we  called  the 
meanest  man  in  the  world.  He  would  argue  longer  about  a 
tenth  of  1  per  cent  additional  discount  on  the  balance  if  you 
paid  it  promptly  than  any  other  human  could  argue.  He  is  the 
type  of  man  the  newspapers  have  to  check  up  the  reporters* 
expense  accounts." 

But  now  all  this  was  changed  over  night.  The  Fox  com- 
panies were  no  longer  going  to  be  run  to  save  money  for  the 
Fox  and  the  Fox  stockholders;  they  were  going  to  be  run  to 
provide  income  for  National  Theatres  Supply,  a  wholly  owned 
subsidiary  of  General  Theatres  Equipment,  controlled  by  the 
voting  shares  of  Clarke  and  Wiggin.  Fox  Film  had  been  sup- 
plied with  $55,000,000  worth  of  spending  money,  and  the  orders 
now  were  to  spend  it  freely  for  the  benefit  of  the  other  Clarke 
companies.  Says  W,  F.: 

"One  of  the  new  executives  installed  by  Clarke,  a  man  who 
was  proficient  in  reading  gas,  water  and  light  meters,  called 
together  the  managers  of  Fox  Theatres  in  New  York  and 
announced  to  them:  'Gentlemen,  the  company  has  $15,000,000 


318     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

in  cash  in  the  bank.5  This  man,  formerly  a  utility  man  and  now 
an  official  of  the  Fox  company,  said:  'The  system  of  buying 
everything  through  a  purchasing  agent  is  at  an  end.  Every  man 
is  responsible  for  his  own  theatre.  No  more  checking  at  the 
home  office.  We  have  $15,000,000  in  the  bank— go  to  it.  You 
boys  go  and  replenish  your  theatres,  and  place  your  orders  through 
the  National  Theatres  Supply/ 

"One  theatre  manager  came  to  me  and  said :  'I  was  at  that 
meeting,  but  my  building  was  in  such  fine  shape  I  couldn't  spend 
a  dollar  to  improve  it  I  was  sent  for.  "Didn't  you  hear  the 
instructions?  You  haven't  spent  anything."  I  said:  "But  I 
have  nothing  to  spend  it  for — I  have  no  occasion."  The  answer 
was:  <fWe  don't  want  the  buildings  in  fine  shape  as  under  the 
Fox  regime.  We  want  them  superfine,  as  under  the  Clarke 
regime.  You  go  on  and  do  something."  I  realized  I  would  lose 
my  job  if  I  didn't.  Only  six  months  before  this  there  had  been 
laid  in  my  theatre  the  finest  carpet  in  New  York,  I  notified  them 
I  needed  new  carpet,  so  they  took  up  my  carpet  and  laid  down 
another  at  cost  plus  15  per  cent/" 

All  the  way  down  the  line,  stories  like  that  kept  coming  to 
W.  F.  Out  in  California  there  was  a  theatre  manager  who 
ordered  a  marquee,  one  of  those  things  like  a  canopy  which 
make  a  cover  for  the  sidewalk.  He  ordered  it  independently, 
making  a  good  bargain ;  but  a  few  days  later  the  New  York  office 
got  wind  of  the  matter  and  forced  him  to  cancel  his  order.  It 
should  have  been  placed  through  National  Theatres  Supply. 
So  he  placed  it  that  way,  and  the  marquee  was  billed  to  him  at 
the  price  which  he  had  formerly  arranged,  plus  15  per  cent 
cooamission  for  National  Theatres  Supply. 

And  then  there  was  Franklin,  manager  of  West  Coast  The- 
atres, now  transformed  to  "Wesco/*  Franklin  was  running 
something  over  500  theatres  in  eleven  states  west  of  the  Rocky- 
mountains,  and  he  was  sent  for  by  Harley  Clarke  and  they  had 
a  row.  Says  W.  F.: 

"That  I  am  sure  is  a  fact,  because  I  met  Franklin  as  he  came 
out  of  Clarke's  office.  I  met  him  in  the  corridor,  and  Franklin 
told  me  he  had  just  had  a  conference  with  Clarke,  a  terrific  con- 
troversy with  him.  He  did  not  tell  me  what  the  controversy 
was  about.  Later  I  learned  what  it  was  by  rumors,  and  yester- 


THE  BUSINESS  OF  LOOT  319 

day  the  story  was  told  to  me  again,  and  it  is  for  that  reason  I 
am  telling  it  now.  In  this  meeting  between  Clarke  and  Franklin, 
Clarke  informed  him  that  he  wanted  this  group  of  theatres  on 
the  West  Coast  to  be  promptly  reconditioned,  and  Clarke  esti- 
mated that  Franklin  would  be  obliged  to  spend  between  four  and 
five  million  dollars.  Franklin  protested,  and'  said  the  expendi- 
ture was  wholly  unnecessary ;  that  these  theatres  had  been  kept 
spick  and  span  and  up-to-date,  and  he  protested  particularly  that 
the  charge  of  four  or  five  million  dollars  would  destroy  the  profit 
that  Wesco  would  make,  and  therefore  he  would  suffer  to  the 
extent  of  the  10  per  cent  of  which  his  contract  called  for  of  the 
profits  made  by  Wesco.  I  am  told  that  Clarke  became  very  angry 
and  said,  'I  will  order  it  done  without  you/  and  Franklin 
reminded  him  that  he,  Franklin,  was  the  president  of  Wesco, 
and  that  he  would  not  sign  a  single  requisition.  Clarke  insisted 
that  Franklin  do  this  job,  and  order  these  new  furnishings  and 
equipment  from  the  National  Theatres  Supply. 

"Franklin  finally  took  this  position:  'If  you  want  it  done,  I 
will  do  it,  but  on  one  condition:  that  it  be  not  subtracted  from 
the  profits  of  the  company,  so  that  it  doesn't  affect  me  personally. 
You  have  a  right  to  do  it  if  you  will,  because  you  are  in  control 
of  the  present  company.  If  you  want  to  affect  its  profits,  that's 
your  business/  On  that  very  day  Franklin's  contract  was  abro- 
gated by  mutual  consent,  in  consideration  of  which  Franklin 
received  $500,000  of  the  company's  money.  The  fact  of  the 
abrogation  I  heard  from  both  Franklin  and  Clarke ;  and  as  to 
the  amount  paid  for  the  abrogation,  Franklin  told  me  he  had 
received  approximately  $500,000,  perhaps  a  little  more  or  a  little 
less. 

"It  is  fair  to  assume  that  after  Franklin  stepped  out,  these 
theatres  were  'reconditioned,  and  the  work  was  done  by  National 
Theatres  Supply;  that  is,  the  work  was  done  by  the  regular 
merchants,  but  instead  of  the  contract  being  made  between  those 
merchants  and  Wesco  it  was  now  made  between  those  merchants 
and  National  Theatres  Supply,  and  National  Theatres  Supply 
made  its  contract  with  Wesco." 

I  have  told  you  of  Clarke's  statement  to  W.  F.,  that  he  would 
not  trust  those  executives  of  the  companies  who  had  turned 
against  W.  F.  I  have  told  how  he  put  a  padlock  on  the  door  of 
22 


320     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Saul  E,  Rogers.  One  by  one  he  got  rid  of  the  others.  Sheehan 
went  away  for  two  years  for  his  health,  and  has  only  just  come 
back.  The  two  Leos,  brothers-in-law  of  W.  F.,  were  retained 
for  a  short  while ;  then  Clarke  paid  them  for  a  year  without  giving 
them  anything  to  do,  and  finally  settled  in  cash  for  the  remainder 
of  their  contracts.  Says  W.  F.: 

"There  are  now  more  executives — more  vice-presidents,  more 
officials,  more  wholly  inexperienced,  incompetent  people  in  charge 
of  performing  duties  that  they  never  understood  and  never  could 
understand.  In  numbers  there  are  five  to  one ;  there  were  eight 
under  my  regime,  and  they  have  at  least  forty  now/' 

Under  such  a  regime  the  surplus  funds  of  course  were  quickly 
got  rid  of.  The  operating  expenses  of  Fox  Film  jumped  more 
than  $12,000,000  in  1930.  Rumors  of  trouble  began  to  come  to 
W.  F.,  and  he  couldn't  see  why  that  advisory  board,  of  which 
he  was  to  be  chairman,  was  never  appointed,  and  never  held  any 
meetings.  He  kept  writing  and  urging,  but  it  wasn't  until  October 
that  the  board  came  into  existence.  It  consisted  of  W.  F.,  Clarke, 
and  Clarke's  attorney,  Otto  Koegel,  who  meantime  had  been  taken 
into  the  firm  of  Hughes,  Schurman  &  Dwight  As  a  reward 
for  their  services  in  turning  Fox  Films  and  Fox  Theatres  over 
to  Clarke,  the  Hughes  firm  had  become  counsel  for  both  com- 
panies, an  important  job;  and  Koegel  was  taken  into  this  firm 
as  a  part  of  the  deal. 

Clarke  and  Koegel  were  supposed  to  meet  with  W.  F.  and 
give  him  a  chance  to  advise  them.  On  October  11,  1930,  W.  F. 
wrote,  as  follows: 

"My  dear  Harley:  Now  that  I  have  been  elected  chairman 
of  the  advisory  committee  of  the  Fox^  Film  Corporation  in  con- 
formity with  the  contract  dated  April  5,  1930,  between  myself 
and  General  Theatres  Equipment  Corporation,  I  have  been  con- 
sidering the  various  problems  of  the  company,  and  the  most 
effective  way  in  which  I  can  give  to  you  and  to  Fox  Film  Cor- 
poration the  benefit  of  my  knowledge  and  experience. 

"Each  production  is  a  sure  key  to  all  of  the  business  mys- 
teries of  the  art.  To  the  trained  eye,  the  picture  reveals  with 
extraordinary  precision  every  dollar  that  went  into  it.  An  exami- 
nation of  the  usual  itemization  of  its  cost  accompanying  the 
delivery  of  each  production  will,  conversely,  clearly  indicate  leak- 


THE  BUSINESS  OF  LOOT  321 

ages,  over-expenditures,  and  other  forms  of  needless  extrava- 
gance. In  a  word,  the  major  operations  of  the  production 
department  can  be  even  more  closely  checked  by  an  inspection 
of  the  film  produced  and  the  cost  itemization  than  by  a  final 
audit  of  the  department.  The  relation  which  cost  bears  to  income 
and  profit  need  not  be  emphasized  to  you. 

"I  am  not  certain  that  this  comes  within  the  sphere  of  my 
duties  as  they  may  be  defined.  If  it  does,  I  feel  that  I  can  give 
you  an  iinerring  check  on  the  business  of  the  company,  which  I 
am  certain  will  prove  of  inestimable  benefit  to  you  and  the  com- 
pany. 

"My  suggestion  is  that  immediately  upon  the  arrival  of  each 
production,  it  be  sent  to  me  at  Woodmere  with  an  itemization  of 
its  cost.  I  have  a  private  projection  room  where  I  can  give  the 
picture  appropriate  study  and  analyze  it  with  reference  to  its 
cost. 

"If  you  entertain  any  lingering  doubt  as  to  the  efficacy  of 
this  method,  try  it.  You  will  get  results  that  will  prove  amazing 
to  you,  as  it  has  proven  to  others  who  have  made  similar  tests. 

"I  am  glad  to  know  that  the  suggestion  recently  given  to  yod 
and  Mr.  Koegel  is  now  in  process  of  adoption. 

"Please  understand  that  I  am  at  all  times  ready  to  give  yota 
the  benefit  of  any  aid  or  assistance  that  you  might  require  in 
your  problems.  You  may  regard  this  as  an  invitation  to  you  to 
call  upon  me  at  any  time  to  serve  both  you  and  the  company  in 
fostering  the  business  of  the  Film  Corporation.  You  will  always 
find  me  available  either  at  my  Woodmere  home  or  at  my  New 
York  residence." 

To  this  came  a  courteous  answer  on  October  20: 

"My  dear  Bill:  I  have  your  kind  offer  of  the  llth  inst,  and 
shall  soon  avail  myself  of  it.  Just  at  present  I  am  completing 
my  studies  of  production,  embracing  all  pictures  of  four  com- 
panies for  the  past  four  years.  The  results  are  most  interesting 
and  have  pointed  the  way  to  many  economies  already  in  force 
and  many  to  come. 

"Again  let  me  say,  I  appreciate  your  friendly  spirit  of 
co-operation  and  remain, 

"Sincerely  yours, 

Haifer." 


322     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

On  December  4,  W.  F.  wrote  again ;  and  so  it  went  on  until 
May  8,  1931.  I  quote  a  letter  from  W.  F.  bearing  that  date: 

"My  dear  Harley :  I  have  repeatedly  written  to  you  requesting 
meetings  of  the  advisory  board  to  meet  some  of  the  very  vitally 
important  problems  which  confronted  the  company  from  time 
to  time  (see  my  letters  dated  October  11,  1930,  November  27, 
1930,  December  4,  1930  and  April  28,  1931)  and  I  have  other- 
wise urged  the  necessity  of  permitting  me  to  advise  with  you 
in  the  handling  of  matters  that  I  deemed  of  vital  concern  to 
the  Fox  companies  and  their  stockholders. 

"It  is  not  difficult  for  me  to  understand  why  I  have  been  care- 
fully excluded  from  all  participation  in  these  activities  and  why 
there  was  carefully  concealed  from  me  the  execution  of  impor- 
tant matters  that  are  now  coming  to  light. 

"As  you  know,  I  have  in  addition  to  my  contract,  a  very 
substantial  stock  interest  in  the  affairs  of  the  company  and  its 
welfare  is  a  matter  of  great  importance  to  me  in  common  with 
that  of  other  stockholders. 

"The  fact  is  that  both  as  a  director  and  as  chairman  of  an 
advisory  board,  I  have  been  carefully  barred  from  any  knowledge 
of  the  inside  operations  of  the  company. 

"I  advised  against  a  contract  which,  in  my  opinion,  subjected 
the  company  to  a  needless  loss  of  over  $1,000,000  per  year. 

"The  making  of  a  license  contract  with  the  Western  Electric 
for  fifteen  years,  in  view  of  the  fact  that  Fox  Film  acquired  the 
right  to  use  the  Tri-Ergon  patents,  was  and  is  in  my  opinion  a 
reckless  waste  of  company  money,  wholly  without  any  benefit. 
This  was  done  over  my  vigorous  protest. 

"I  warned  you  last  October  that  production  costs  in  my  opin- 
ion were  grossly  excessive  and  I  suggested  a  simple  method  by 
which  I  could  check  them.  No  attention  whatsoever  was  paid 
to  that,  although  as  I  anticipated,  the  failure  to  do  it  involves 
the  company  in  an  enormous  loss  which  you  had  a  ready  means 
to  avoid. 

"Your  well  known  policy  of  keeping  efficient  and  experienced 
men  who  are  under  high  salaried  contracts  in  idleness  while  the 
work  they  are  being  paid  to  do  is  left  in  the  hands  of  others, 
is  an  unnecessary  duplication  of  expenditure  that  cannot  escape 
criticism. 


THE  BUSINESS  OF  LOOT  323 

"There  are  other  matters  of  equal  importance,  to  which  my 
attention  has  been  recently  called,  that  must  be  remedied. 

"I  repeat,  it  is  not  difficult  for  me  to  understand  why  I  have 
been  entirely  excluded  from  activities  of  the  business.  Informa- 
tion is  being  brought  to  me  daily  of  huge  and  meaningless 
expenditures  and  methods  of  operation  that  are  seriously  preju- 
dicing the  interest  of  stockholders. 

"I  am  not  now  in  the  humor  of  politely  asking  for  a  meeting 
of  the  advisory  committee.  I  am  now  demanding  that  such 
meeting  be  had  at  once.  The  fact  is  that  you  and  Mr.  Koegel 
are  the  other  two  members  of  the  committee  and  without  you, 
I  cannot  hold  the  meeting,  else  I  would  have  held  one  long  ago. 

"I  expect  an  immediate  response." 

The  soft  answer  turneth  away  wrath,  we  are  told;  and  we 
have  been  told  by  W.  F.  that  Clarke  is  a  man  not  easy  to  offend. 
We  find  him  on  May  9  making  a  soft  answer  to  his  "dear  Bill." 
He  is  "somewhat  grieved  and  not  a  little  surprised"  at  the  atti- 
tude shown  by  his  friend.  He  tells  his  "dear  Bill"  that  he  has 
made  repeated  attempts  to  get  him  on  the  telephone.  "On  many, 
occasions  I  have  tried  to  reach  you."  From  the  14th  to  the  25th 
of  April,  he  called  every  day,  twice  a  day,  from  New  York  or 
Chicago.  W.  F.  says  there  is  something  suspicious  about  a 
business  man  who  calls  another  man  so  often  on  the  telephone, 
and  never  takes  the  trouble  to  write  him  a  letter  or  send  him  a 
telegram,  to  have  a  record  of  the  procedure.  W.  F.  says  that 
he  never  had  any  word  from  his  employes  that  Clarke  was  trying 
to  get  him. 

Clarke  proceeded  to  make  an  appointment  for  a  meeting  of 
the  advisory  board  during  that  week.  Two  meetings  were  held, 
but  W.  F.  could  get  none  of  his  plans  adopted.  On  June  15,  I 
find  W.  F.  writing  to  Wiggin  and  Aldrich  of  the  Chase  National 
Bank,  telling  them  that  he  has  learned  from  the  newspapers  that 
he  has  not  been  re-elected  as  a  member  of  the  board  of  directors 
of  Fox  Film,  and  as  they  now  control  the  voting  shares,  he 
reminds  them  that  when  he  sold  these  shares,  it  was  stipulated 
as  a  condition  of  the  sale  that  the  purchaser  would  procure  the 
election  and  re-election  of  W.  F.  as  a  director  for  a  period  of 
five  years  from  May  1,  1930.  Said  W.  F.  to  the  Chase  Bank: 

"It  is  said  that  the  Class  B  stock  of  Fox  Film  Corporation 


324     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

has  now  passed  into  the  possession  and  control  of  your  institu- 
tion as  part  of  an  approximately  $100,000,000  financing  of  Clarke 
enterprises.  If  that  is  true,  accountability  for  the  non-observance 
of  the  conditions  of  the  sale  and  transfer  o£  the  Class  B  stock 
rests  with  you. 

"In  reliance  upon  the  observation  of  these  conditions  I  have 
acquired  a  very  substantial  block  of  Class  A  stock  of  Fox  Film 
Corporation  which  I  thought  I  was  in  a  position  to  protect.  My 
attitude  with  respect  to  that  is  reflected  in  the  annexed  corre- 
spondence wiiich  I  recently  had  with  Mr.  Clarke  and  of  which 
you  are  doubtless  not  informed." 

W.  F.  asked  for  an  appointment  to  discuss  this  matter,  but 
he  did  not  get  it.  I  asked  him  why  he  did  not  take  legal  steps  to 
enforce  his  rights;  to  which  he  answered:  "What  good  would 
it  have  done?  I  had  no  power  to  prevent  the  things  they  were 
doing,  and  I  could  only  have  sat  there  and  been  unhappy  at,  the 
spectacle." 

You  will  note  in  the  correspondence  with  Harley  Clarke  the 
reference  to  the  Tri-Ergon  patents.  Fox  Film  was  paying  West- 
ern Electric,  which  was  the  Telephone  Company  and  our  old 
friends  Otterson  and  Gifford,  a  million  dollars  a  year  for  a 
license.  But  now,  W.  F.  had  granted  to  Fox  Film  a  license 
under  the  Tri-Ergon  patents,  and  W.  F.  was  taking  the  position 
that  the  payments  to  the  Telephone  Company  were  unnecessary. 
Do  you  remember  that  scene  in  court,  when  Pratt,  the  counsel 
for  Otterson,  insisted  that  the  Telephone  Company  was  not 
satisfied  to  get  back  its  $15,000,000  plus  interest  from  the  Fox 
companies,  but  also  wanted  an  opportunity  to  run  the  Fox  com- 
panies, in  order  to  make  certain  that  these  companies  would  carry 
out  satisfactorily  a  fifteen-year  contract  with  the  Telephone 
Company,  which  Pratt  incorrectly  stated  had  been  signed.  Now 
you  see  how  the  Telephone  Company  has  accomplished  its  pur- 
pose ;  it  has  ousted  the  Fox,  and  put  in  Harley  Clarke^  and  Clarke 
has  signed  this  contract  and  is  carrying  it  out.  Winthrop 
W.  Aldrich,  of  the  Chase  Bank,  is  a  director  of  the  Telephone 
Company. 

There  were  several  other  suggestions  made  by  W.  F.  which 
were  wholly  unsatisfactory  to  a  utility  magnate  in  charge  of 
moving  picture  making.  For  example,  W.  F.  called  attention 


THE  BUSINESS  OF  LOOT  325 

to  the  fact  that  there  exists  a  Foxthal  Company,  in  which  Fox 
Theatres  has  a  SO  per  cent  ownership.  The  other  half  is  owned 
by  A.  C  Blumenthal,  and  Blumenthal  owes  the  Foxthal  Company 
close  to  $3,000,000,  of  which  Fox  Theatres  should  have  half, 
W.  F.  makes  the  suggestion  that  Fox  Theatres  should  collect 
that  money,  but  he  learns  that  Fox  Theatres  is  not  interested  to 
collect  it ;  on  the  contrary,  it  has  paid  an  extra  $500,000  to  Blumy. 
This,  of  course,  was  part  of  the  deal  which  was  made  with  Blumy, 
for  helping  in  the  ousting  of  W.  F,  There  was  supposed  to  be 
an  advisory  committee  of  Fox  Theatres,  as  well  as  of  Fox  Film, 
but  this  committee  was  never  named,  and  W.  F.  was  never 
invited  to  a  session. 

Of  course  this  collapse  of  Fox  Theatres  was  in  the  midst  of 
a  general  collapse  of  business,  and  can't  all  be  attributed  to 
Wiggin  and  Clarke  and  Stuart  and  Otterson !  But  W.  F.  thinks 
he  would  have  known  how  to  deal  with  this  period  of  recession. 
He  points  out  the  record  which  Fox  Film  made  through  the  panic 
years  of  1920  and  1921,  doing  the  largest  business  in  its  history.- 
The  recent  spell  would  have  been  a  test  of  his  mettle,  and  one 
thing  that  grieves  him  is  that  he  was  deprived  of  the  chance  to 
show  what  he  could  do  to  keep  his  ship  afloat  through  the  hur- 
ricane. How  much  more  he  would  have  enjoyed  that  than  the 
melancholy  satisfaction  of  pointing  out  the  blunders  of  Hariey 
Clarke! 


REEL  TWENTY-SEVEN 
EMPTY  SHELLS 

WE  have  witnessed  in  detail  the  process  of  looting  two  pros- 
perous business  concerns.  Let  us  now  survey  the  results 
of  this  wrecking  enterprise,  clearly  revealed  in  the  financial  state- 
ments issued  by  Harley  L.  Clarke  and  his  successors  in  control. 
,These  statements  have  been  carefully  prepared  by  experts,  and 
are  meant  to  hide  as  much  as  possible;  but  our  Fox  takes  them 
and  strips  away  the  verbiage  and  the  trickeries.  He  says : 

"Please  bear  in  mind  that  the  raiding  party  which  looted  the 
Fox  companies  never  claimed  that  the  liabilities  of  these  companies 
were  more  than  $91,000,000.  That  $91,000,000  liability  was 
naturally  reduced  at  least  by  the  last  quarter's  earnings  of  1929, 
which  were  more  than  $5,000,000;  and  was  likewise  reduced  by 
the  amount  received  for  the  First  National  stock  from  Warner 
Brothers  which,  after  deducting  the  commissions,  was  $9,500,000. 
Subtracting  these  two  items,  almost  $15,000,000,  from  $91,000,000 
they  advertised  I  owed,  would  leave  the  net  liabilities  of  the  com- 
panies $76,000,000.  For  the  first  quarter  of  1930— and  this  was 
before  I  sold  my  voting  shares — the  Fox  Film  Corporation  earned 
$4,700,000;  subtract  that  from  the  $76,000,000,  left  the  net  debt 
a  fraction  over  $70,000,000. 

"You  have  a  perfect  right  to  inquire,  therefore,  what  happened 
to  the  $103,000,000  of  new  capital  that  went  into  the  Fox  com- 
panies. There  seems  to  have  been  borrowed  $33,000,000  more 
than  was  required  to  pay  the  debts  of  these  companies.  Under 
the  Clarke  regime,  it  was  reported  that  they  earned  during  1930 
a  fraction  over  $8,000,000,  or  almost  sufficient  to  pay  the  full 
dividend  paid  that  year.  So  the  amount  of  debts  owed  and  the 
new  capital  raised  still  leaves  $33,000,000  of  cash  on  hand.  How 
did  these  funds  find  their  way  out  of  the  treasury  of  the  com- 
pany? Why  have  the  companies  any  debts  now?  In  the  last 

326 


EMPTY  SHELLS  327 

published  statement  the  certified  accountant  declares  that  the 
losses  of  Fox  Film  for  1931  were  $4,250,000.  There  weren't 
any  dividends  paid  in  1931.  Subtracting  the  $4,250,000  from 
$33,000,000,  there  should  still  be  $29,000,000  on  hand  and  no 
debts. 

"And  yet  when  you  examine  the  1931  statement,  you  find  the 
cash  is  nearly  gone,  and  the  company  is  heavily  in  debt.  I  am 
sure  that  on  the  reading  of  the  statements  you  will  be  unable  to 
see  or  imagine  what  happened  to  this  thirty  millions  of  money 
that  was  obtained  by  this  company  over  and  above  its  total  lia- 
bilities/' 

W.  F.  analyzes  the  financial  reports  of  his  companies  after  he 
lost  control,  and  shows  how  they  have  been  manipulated.  I  am 
going  to  quote  all  these  statements,  because  they  are  essential  to 
the  proof  of  his  contentions;  but  I  explain  in  advance  that  the 
matters  are  technical,  and  there  is  no  way  to  make  them  simple. 
Those  who  do  not  understand  financial  terms  may  skip  the  rest 
of  this  "reel."  Says  W.  R: 

"I  have  before  me  a  statement  of  Fox  Film  as  of  December 
87,  1930,  from  which  it  would  appear  that  the  company  should 
have' plenty  of  money.  There  is  made  a  comparison  between  the 
year  ending  December  28,  1929,  under  the  Fox  regime,  ^nd  the 
year  ending  December  27,  1930,  most  of  it  under  the  Harley 
Clarge  regime.  By  manipulation  and  only  by  manipulation  they 
were  able  to  reduce  the  profits  of  the  1929  Fox  regime  to  $9,469,- 
051,  when  the  fact  of  the  matter  is  that  the  profits  that  I  left  with 
that  company,  earned  in  1929,  were  upwards  of  $13,500,000,  plus 
the  non-recurrent  profit  for  the  sale  of  First  National  shares  to 
the  Warner  Company,  which,  after  deducting  what  these  shares 
had  cost  the  company,  gave  a  net  profit  of  $8,500,000.  These 
two  items  combined,  the  Fox  Film  Corporation  earned  in  1929 
approximately  $22,000,000.  But  here  on  their  statement  that  I 
have  before  me,  figures  they  prepared  after  I  sold  out,  they  show 
a  profit  of  $9,469,051,  and  have  shifted  the  difference  to  the 
profit  made  in  1930. 

"Please  bear  in  mind  that  in  the  first  three  months  of  1930, 
before  I  sold  out,  we  had  actually  earned  $4,700,000 ;  they  show 
the  net  profit  for  the  year  to  be  $10,251,827,  They  show  a  net 
profit  for  the  two  years  of  a  fraction  under  $20,000,000,  when 


328     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

the  fact  of  the  matter  is  Fox  Film  Corporation  earned  in  1929, 
tinder  my  regime,  $22,000,000.  Is  it  not  clear  that  in  correcting 
these  books  they  have  simply  taken  the  profits  made  in  1929  and 
deferred  them  on  the  statement  of  1930?  The  profits  earned  in 
1929  are  greater  than  the  profits  shown  here  earned  in  both  years. 
It  would  appear  from  this  that  Fox  Film  Corporation  earned  no 
profits  in  1930,  and  that  the  statement  that  it  earned  $10,251,000 
is  aij  error. 

"They  are  fine  accountants.  Here  is  an  item  of  interest  which 
shows  how  intelligent  they  are  and  how  well  they  know  how  to 
keep  books.  In  the  year  ending  December  28,  1929,  there  is  an 
item  provisioned  for  Federal  taxes  of  $1,266,000.  Profit  earned 
shown  that  year  $9,469,051.  They  had  a  much  more  prosperous 
year  in  1930,  so  their  statement  reads;  they  show  that  the  net 
profit  in  1930  was  $10,251,827;  but  the  provision  for  Federal 
taxes  has  shrunk  from  $1,266,000  in  1929  to  $248,254  in  1930! 
Of  course  it  is  clear  what  they  have  done;  this  tax  item  gives  it 
away.  They  paid  only  one-fifth  as  much  Federal  taxes  in  1930, 
because  they  had  made  only  one-fifth  as  much  profits  in  1930. 
The  profits  had  been  made  in  1929,  and  then  carefully  spread 
over  two  years  in  the  reports.  It  is  interesting  to  know  that  the 
operating  expense  in  1929  was  $42,739,000,  and  in  1930  it  was 
$54,563,000." 

W.  F.  naturally  makes  a  great  deal  out  of  the  fact  that  in 
the  Fox  Film  report  of  December  27,  1930,  they  stopped  their 
statement  of  income  from  film  rentals  with  the  record  he  had 
made. 

"They  give  the  activities  here  for  sixteen  years,  a  summary 
of  the  costs  and  rentals.  Evidently  in  1929  the  gross  rentals  were 
at  the  peak,  so  they  stopped  at  1929.  The  cost  of  negatives  of 
1929  evidently  is  much  less  by  millions  than  the  cost  of  negatives 
of  1930.  Therefore,  they  stop  at  1929.  But  when  you  look  at 
the  opposite  page,  they  give  you  a  summary  of  the  activities  of 
the  theatre  holdings  of  Fox  Film.  During  my  regime,  I  had 
increased  the  number  of  theatres  owned  and  controlled  about  as 
follows:  2  in  1927;  249  in  1928;  455  in  1929;  and  before  I  had 
sold  out  in  1930  it  was  532.  They  gave  the  1930  figures  there, 
and  they  give  it  to  you  because  with  a  greater  number  of  the- 
atres, the  gross  receipts  are  greater  than  in  1929.  The  cost  of 


EMPTY  SHELLS  329 

the  negatives  of  1930  was  greater  than  the  negatives  of  1929,  the 
last  year  of  my  regime ;  so  they  are  silent,  and  give  no  figures  on 
that  point.  The  picture  cost  in  1930  amounted  to  $26,203,623,01, 
as  against  the  highest  cost  that  the  company  ever  had  in  the  his- 
tory of  its  career,  $22,743,665.29  for  1929. 

"There  is  an  explanation  to  be  made  of  this  item.  The  last 
year  during  which  I  was  in  my  full  physical  strength  to  carry  on 
the  affairs  of  my  company  .through  the  entire  year  was  the  year 
1928,  and  during  that  year  the  cost  was  $16,185,10275,  But  in 
July  of  1929  I  was  disabled,  and  unable  to  carry  on  the  conduct 
of  the  business,  and  it  was  then  in  the  hands  of  the  great  execu- 
tives who  signed  the  round-robin  letter.  Just  as  soon  as  they 
found  me  lying  on  my  back,  it  appears  that  they  took  full  charge, 
and  promptly  mounted  the  cost  of  the  production  by  more  than 
$6,000,000.  It  is  the  cost  of  1928  that  I  assume  responsibility 
for,  $16,185,102.75.  The  cost  in  1930  had  mounted  to  $26,203,- 
623.01,  an  increase  of  $10,000,000  under  the  Harley  Clarke 
regime." 

Later  on  in  our  talks,  W.  F.  took  up  the  consolidated  balance 
sheets  of  Fox  Film.  He  said: 

"On  August  26,  1930,  Harley  Clarke  sent  to  the  stockholders 
of  Fox  Film  Corporation  a  letter;  part  of  this  letter  is  a  balance 
sheet  of  Fox  Film  Corporation  as  of  June  28,  1930.  This  letter 
and  balance  sheet  is  of  great  interest  to  this  story,  because  it  is 
the  first  balance  sheet  issued  by  the  company  after  the  new 
financing  had  been  done. 

"In  connection  with  this  letter,  and  the  many  other  communi- 
cations sent  by  Clarke  to  the  stockholders,  and  the  many  items 
that  appeared  in  the  newspapers  from  time  to  time,  and  on  the 
Jones  ticker,  each  indicating  how  well  the  company  was  doing, 
and  how  everything  was  improving,  how  the  expenses  were  being 
reduced  and  the  income  was  being  increased — all  this  reminds 
me  of  an  old  story  of  Joe  Miller.  It  was  about  a  man  whose 
wife  was  at  the  hospital,  dangerously  ill.  Each  day  when  the 
husband  called  to  see  her,  he  would  be  told  that  visitors  would 
not  be  allowed,  but  that  his  wife  was  improving.  Shortly  there- 
after, when  he  called  again,  his  wife  was  dead,  and  he  was  per- 
plexed, and  asked  the  physician  this  question :  'Doctor,  is  it  fair 
for  me  to  presume  that  my  wife  died  of  improvements?' 


330     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

"In  this  letter  of  Clarke's  to  his  stockholders  of  August  26, 
1930,  may  I  call  your  attention  to  the  second  paragraph  in  which 
he  states :  'You  will  note  that  the  current  assets  are  two  and  one- 
half  times  the  current  liabilities.  You  will  also  note  that  the  net 
worth  of  the  company  is  $104,407,845.49,  or  approximately  $40 
per  share  on  both  classes  of  stock  outstanding/  I  call  your 
attention  to  the  fact  that  this  $40  per  share  was  just  about  one- 
half  the  value  per  share  of  the  900,000  and  some  odd  shares  that 
were  outstanding  previous  to  my  selling  my  voting  shares.  Look 
at  the  balance  sheet  prepared  by  louche,  Niven  &  Company, 
dated  December  28,  1929,  where  it  appears  that  the  value  of  the 
shares,  plus  the  earned  surplus  of  $22,400,000,  was  $73,063,000. 
That  divided  by  900,000  shares  places  the  actual  book  value  of 
these  shares  at  $80  per  share. 

"The  value  of  these  shares  had  naturally  shrunk  when  Clarke 
had  1,600,000  additional  shares  sold  to  himself  at  $30  a  share. 
In  doing  that  he  had  got  for  himself  this  terrific  bargain,  making, 
as  I  have  shown  you,  a  clear  profit  of  $25,000,000  for  himself  and 
his  associates.  The  owners  of  the  other  900,000  shares  of  stock 
naturally  found  the  values  destroyed  by  this  act;  this  issuance 
of  1,600,000  shares  at  $30  a  share,  for  which  the  stockholders 
were  deprived  of  their  rights  to  subscribe.  Their  pre-emptory 
rights  were  taken  from  them  by  this  manipulation. 

"It  was  because  of  this  that  on  August  26,  1930,  Clarke 
boastfully  told  them  that  all  of  their  shares  were  worth  $40  a 
share,  and  that  the  net  worth  of  the  company  as  of  that  day  was 
$104,407,805.49.  What  has  happened  to  this  net  worth  since 
then  ?  This  letter  was  written  less  than  one  year  and  nine  months 
ago.  What  happened  to  the  value?  It  wasn't  lost  during  the 
year  of  1930,  because  over  Clarke's  own  signature  there  appears 
the  statement  in  the  annual  report  to  the  stockholders  of  Decem- 
ber 27,  1930,  that  the  profits  for  the  year  of  1930  were  more 
than  $10,000,000.  If  that  is  correct,  then  how  was  the  net  worth 
of  $104,407,805.49  affected?  In  the  statement  issued  as  of 
December,  1931,  there  is  a  frank  admission  that  there  was  no 
profit  in  the  year  1930,  but  a  loss  of  four  million  and  some  odd 
dollars.  The  $10,000,000  of  1930  earnings  were  not  used  to  pay 
dividends — there  were  no  dividends  In  1931.  The  net  worth  at 
this  writing  ought  to  be  $100,000,000.  The  consolidated  balance 


EMPTY  SHELLS  331 

sheet  of  December  26,  1931,  shows  the  net  worth  at  $50,644,298, 
It  is  exactly  half  of  the  net  worth  as  indicated  in  the  balance 
sheets  of  the  previous  year.  In  that  report  Tinker  writes  the 
shares  down  to  $5  each,  or  $12,500,000  for  the  two  and  one-half 
million  of  them.  But  even  that  is  too  much.  The  net  worth  as 
the  stock  market  now  quotes  the  stock  of  Fox  Film  is  two  and 
one-half  million  times  $1.  What  happened  to  the  other 
$97,500,000?" 

Before  long  we  shall  see  William  A.  Gray,  attorney  for  the 
United  States  Senate  investigating  Wall  Street  stock  deals,  tak- 
ing up  this  matter  of  the  Harley  Clarke  management  of  Fox  Film 
and  Fox  Theatres.  In  his  statement  before  the  Senate,  June  17, 
1932,  Gray  supports  the  contentions  of  W.  F.,  declaring  that  after 
the  Clarke  group  took  control,  "at  three  different  periods  of  time 
statements  were  given  out  with  respect  to  the  financial  position 
of  Fox  Film  at  the  end  of  December,  1929,  and  they  varied  with 
respect  to  the  statement  of  the  reserve  and  the  surplus  to  the 
extent,  in  one  case,  of  at  least  $6,000,000.  In  other  words,  they 
gave  out  a  statement — It  did  not  suit  their  purpose,  and  they  gave 
out  another.  That  did  not  suit  their  purpose,  and  they  gave  out 
another  one." 

Gray  goes  on  to  tell  the  experiences  of  John  W.  Pope,  "one 
of  the  ablest  statisticians  in  the  New  York  district."  Pope  sent 
a  wire  to  the  members  of  the  brokerage  house  with  which  he 
was  connected,  and  to  his  customers  and  clientele,  telling  them  to 
sell  their  Fox  stock,  "that  he  did  not  like  the  looks  of  the  picture, 
and  that  their  statements  did  not  represent  the  true  condition. 
For  that,  charges  were  brought  against  him  before  the  New  York 
Stock  Exchange.  .  .  .  He  went  before  the  Stock  Exchange  and 
proved  his  case  and  was  exonerated.  All  that  shows  the  frenzied 
financing,  and  apparent  financing,  and  the  information  that  is 
given  to  the  public  about  it,  and  when  you  get  all  through  with 
it,  you  come  to  the  conclusion  that  the  public  never  knows  any- 
thing about  what  is  going  on." 

Now  let  us  turn  to  Fox  Theatres.    Says  W.  F. : 

"In  analyzing  the  1929  balance  sheet  of  the  Fox  Theatres 
Company,  you  recall  that  the  Loew  shares  were  sold,  and  the  Fox 
Theatres  Corporation  received  for  them  the  full  amount  they 
paid  for  them,  $75,000,000.  At  that  time  there  stood  against  Fox 


332     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

Theatres  the  following  debts:  to  the  Telephone  Company,  $15,- 
000,000;  to  the  bankers  and  brokers  who  held  as  collateral  the 
Loew  shares,  $26,000,000;  to  Fox  Film  approximately  $18,000,- 
000;  a  single  bank  liability,  only  one,  for  a  note  for  $400,000, 
given  in  connection  with  the  purchase  of  a  piece  of  property  in 
Boston  that  the  sellers  were  unable  to  deliver,  because  the  title 
was  bad.  The  sum  of  $400,000  that  appears  on  this  balance  sheet 
is  on  deposit  in  the  bank  that  loaned  it  to  the  company ;  otherwise 
not  a  single  dollar  of  debt  to  a  bank.  The  only  other  liability 
item  you  will  find  is  $1,400,000  due  Herbert  Lubin,  payable  over 
a  period  of  four  years  in  installments.  This  was  in  connection 
with  the  purchase  of  the  Roxy  Theatre.  Therefore,  the  total 
liabilities  that  will  appear  on  the  December  balance  sheet  of  the 
Fox  Theatres  Company  will  be  a  total  of  $60,800,000.  Therefore 
the  company  should  have  $14,000,000  cash  on  hand.  In  its  opera- 
tion of  1930  it  earned  a  profit,  and  in  1931  it  incurred  a  loss; 
the  loss  of  one  year  and  profit  of  another  year  about  balancing. 
Where  is  the  $14,000,000? 

"This  company  paid  no  dividend  last  year.  Not  only  has  it 
not  got  it,  but  it  is  heavily  indebted.  It  is  unable  to  pay  the  rent 
of  the  theatres  on  lease;  has  defaulted  in  the  interest  on  all  its 
mortgages ;  and  is  now  in  receivership,  bankrupt.  Where  is  the 
$14,000,000?  Who  got  that?  How  did  it  find  its  way  out  of 
the  treasury  of  that  company?  Into  whose  pocket  did  it  flow? 
What  part  of  the  $14,000,000  found  its  way  out  of  that  com- 
pany into  the  treasury  of  General  Theatres  Equipment  or  of  its 
subsidiary,  National  Theatres  Supply?  That's  an  inquiry  that 
any  stockholder  of  those  companies  is  entitled  to  make." 

And  here  are  the  balance  sheets : 

"According  to  a  statement  issued,  dated  October  26,  1930, 
and  certified  to  by  F.  W.  LaFrance  &  Co.,  who  are  the  account- 
ants for  Harley  L.  Clarke  and  General  Theatres  Equipment 
Corporation,  it  appears  that  the  net  worth  of  Fox  Theatres  is 
$51,375,116.26.  This  statement  shows  that  in  the  fiscal  year  end- 
ing October,  1930,  the  company  lost  in  operation  $2,484,824.07 
and  this  amount  has  been  subtracted,  and  the  net  worth  is  still 
$51,375,116.26.  I  now  read  from  the  balance  sheet  issued  by 
Touche,  Niven  &  Co.  marked  'Revised  to  December  26,  1929,' 
which  is  the  consolidated  balance  sheet  of  December  28,  1929. 


EMPTY  SHELLS  333 

This  was  the  date  of  the  last  fiscal  year  that  this  company  was 
under  my  management.  On  this  balance  sheet  we  find  the  net 
worth  of  the  company  $63,650,000;  so  there  has  been  a  loss  of 
$12,000,000'  from  one  October  to  another  October.  In  the  state- 
ment issued  by  the  Clarke  regime,  dated  October  26,  1930,  they 
show  a  deficit  in  operation  in  that  year  of  $2,013,133;  so  that 
leaves  $10,000,000  difference,  which  perhaps  can  be  located  with 
a  magnifying  glass,  but  not  with  my  naked  eyes." 

This  Harley  Clarke  regime  lasted  for  eighteen  months.  Then 
the  Chase  Bank,  which  was  doing  all  the  financing,  couldn't  stand 
it  any  more,  and  they  gave  Harley  Clarke  a  dose  of  the  same 
medicine  which  he  and  his  friends  had  administered  to  the  Fox ; 
they  took  away  his  control  of  the  voting  shares,  and  kicked  him 
upstairs,  making  him  chairman  of  the  board,  and  putting  in  as 
president  Edward  Tinker,  formerly  chairman  of  Chase  Bank  and 
Chase  Securities.  You  will  remember  Tinker  as  the  gentleman 
who  made  the  deal  for  Chase  Bank  with  the  Lehman  group  of 
bankers,  to  divide  the  profits  of  the  Fox  financing,  the  deal  which 
brought  about  the  Japanese  meeting.  You  will  remember  how 
W.  F.  called  him  on  the  telephone  and  he  confirmed  Clarke's 
statement  about  this  deal.  Now  Tinker  was  put  in  charge  of  the 
Fox  companies,  to  show  how  a  real  banker  would  run  the  moving- 
picture  business.  W.  F.  went  to  see  Tinker. 

"We  had  two  lengthy  conferences  which  were  arranged  by 
a  mutual  friend.  I  indicated  to  him  that  even  at  this  time  it 
wasn't  too  late  to  save  these  companies,  and  that  I  was  anxious 
and  desirous  of  doing  so.  In  these  two  conferences  Tinker  was 
very  friendly.  He  said  he  wouldn't  pretend  that  he  knew  any- 
thing about  the  running  of  a  moving  picture  company;  that  he 
was  elected  as  the  only  man  that  all  the  parties  were  willing  to 
agree  upon.  I  tried  to  find  out  what  he  meant  by  all  the  parties. 
He  said  the  various  groups  that  were  now  interested  in  that 
enterprise.  He  said :  'Why  it  was  wished  on  me,  I  don't  know. 
I  didn't  seek  it.  I  practically  told  them  I  didn't  understand  it ; 
but  they  said  they  all  had  confidence  in  me,  and  could  agree  on 
me  in  common  as  the  man  to  run  these  companies.'  He  said  he 
knew  he  couldn't  run  them,  but  what  he  was  going  to  try  to  do 
was  find  a  new  staff  of  executives.  If  he  could  find  the  right 
men,  they  might  work  out  their  problems.  He  inquired  from 


334     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

me  about  the  still  remaining  Fox  executives  that  Clarke  had 
inherited,  and  I  tried  my  best  to  give  him  a  very  accurate  descrip- 
tion of  each  one — his  origin  and  his  ability.  He  was  certain 
that  the  present  executives  had  proved  themselves  wholly  incom- 
petent, and  that  a  new  set  would  have  to  be  provided.  If  that 
wasn't  so,  there  would  be  no  need  of  him  being  president  of  the 
company;  Clarke  could  have  remained. 

"Our  talks  were  of  a  kind  that  were  intended  to  be  frank 
with  each  other,  and  not  conceal  anything,  or  say  one  thing  and 
mean  another.  I  emphatically  declared  that  he  and  all  the  execu- 
tives that  he  would  dream  of  hiring  couldn't  save  this  situation; 
that  I  had  a  definite  plan  in  my  mind  which  would  result  in  the 
reconstruction  of  these  companies ;  that  I  didn't  want  to  be  either 
a  director  or  an  officer  of  the  companies.  I  wanted  to  be  an  out- 
side man  to  do  a  job,  and  if  I  did  a  satisfactory  job,  I  wanted 
to  be  paid;  and  if  I  didn't,  I  wanted  nothing.  I  informed  him 
that  I  had  wanted  $15,000,000  to  get  out,  and  I  wanted  $25,000,- 

000  to  come  back.     If  I  was  engaged  to  do  this  job,  I  could 
rescue  the  Chase  Bank's  $100,000,000. 

"I  frankly  told  him  that  my  doing  of  this  work  was  wholly 
objected  to  by  Mrs.  Fox ;  that  although  I  told  her  that  the  price 

1  was  fixing  for  my  return  was  $25,000,000,  she  had  been  urging 
me  to  have  nothing  to  do  with  it.     Her  position  was  that  the 
present  stockholders  of  Fox  Film  were  not  the  stockholders  of 
the  days  when  I  controlled  those  companies ;  the  Chase  Bank  and 
its  gang  of  raiders  in  their  manipulations  had  wiped  out  the 
original  stockholders,  and  that  even  though  I  was  to  get  $25,000,- 
000,  I  ought  never  raise  a  finger  to  enable  the  Chase  Bank  to 
get  out  of  this  jam.    I  told  him  that  in  spite  of  her  contention, 
I  would  like  to  do  this  job,  complete  it  successfully,  and  thus 
write  the  closing  chapters  of  my  story." 

Tinker  thought  over  this  proposition  from  the  Fox,  but  he 
did  not  accept  it.  Very  probably  he  did  not  have  the  power  to 
accept  it.  He  went  on  to  run  the  companies,  and  they  gave  him 
a  "rather  high-class"  board  of  directors,  including  Winthrop  W. 
Aldrich,  the  new  head  of  the  Chase  Bank,  and  General  Cornelius 
Vanderbilt.  W.  F.  is  amused  to  note  that  the  day  the  Vanderbilt 
name  was  announced,  the  price  of  Fox  Film  on  the  market 
dropped  $10  a  share! 


EMPTY  SHELLS  335 

He  takes  up  the  financial  statements  showing  what  this  new 
regime  was  able  to  do;  beginning  with  the  annual  report  of 
December  26,  1931. 

"You  will  recall  an  open  charge  that  the  directors  under  the 
Fox  regime  were  rubber  stamps  for  William  Fox ;  his  directors 
were  supposed  to  be  wholly  incompetent.  Sheehan,  who  was  one 
of  the  directors  during  the  1929  period,  complained  in  the  affi- 
davits he  signed  against  Fox  that  at  no  time  was  he  ever  con- 
sulted with  reference  to  the  finances  of  the  Fox  enterprises.  He 
appears  on  the  list  of  directors  of  the  fifty-two  week  period  end- 
ing December  26,  1931,  and  he  now  finds  himself  in  much  better 
company  than  he  did  in  the  1929  period.  It  is  fair  to  assume 
that,  having  complained  that  he  was  kept  in  ignorance  of  the 
finances  of  1929,  he  safeguarded  against  a  recurrence  of  it,  and 
insisted  and  demanded  that  he  be  kept  informed  as  to  the  finances 
of  the  corporation  during  the  period  of  1931. 

"My  rubber  stamp  dummy  directors  of  1929,  dumb  as  they 
were  and  as  automatic  as  they  were  obliged  to  be,  being  only 
rubber  stamps,  were  directors  of  a  corporation  that  made  a  profit 
of  $13,500,000,  and  a  non-recurring  profit  on  the  sale  of  the 
First  National  shares  to  Warner  Brothers  of  $8,500,000.  The 
combined  amounts  were  more  than  $22,000,000.  And  now  let 
us  see  the  record  of  the  high-class  directorate  listed  in  the  state- 
ment of  December  26,  1931.  Edward  R.  Tinker  signs  this  state- 
ment and  makes  a  long  explanatory  statement  to  the  stockholders, 
in  the  most  beautiful  language,  but  it  is  all  confusion  to  me.  In 
spite  of  the  fact  that  I  founded  this  company,  and  operated  it 
for  fifteen  years,  his  figures  are  wholly  confusing  to  my  trained 
eye — except  for  one  fact,  which  is  clear  to  me,  and  most  likely 
was  clear  to  all  of  the  stockholders  of  the  company:  that  there 
was  shown  a  net  loss  after  taxes  of  $4,263,557.56  for  the  year 
1931,  as  compared  with  the  $20,000,000  profit  earned  the  last 
year  that  the  company  was  under  my  control  and  management. 

"The  other  most  startling  thing  in  this  statement  is  the  fact 
that  on  the  balance  sheet  of  the  assets  and  liabilities  there  has 
been  a  change  made  in  the  method  of  bookkeeping.  Amongst 
the  current  assets  there  now  appears  an  item  of  inventory,  and  in 
bracketing,  unamortized  cost  of  $17,136,300.27.  This  item,  under 
my  regime,  was  never  among  current  assets.  On  careful  exam- 

23 


336     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

ination,  I  am  wondering  why  the  change  was  made ;  but  on  closer 
examination,  it  becomes  evident  why.  If  this  amount  had  not 
been  lifted  from  where  I  originally  had  it  into  current  assets, 
the  current  assets  that  now  appear  as  $23,402,481.05  would  be 
less  by  the  sum  of  $17,136,300.27;  or,  in  other  words,  the  current 
assets  would  be  a  little  over  $6,000,000. 

"And  then,  on  looking  at  the  liabilities,  I  find  the  current 
liabilities  of  $16,637,895.78.  If  the  inventories  had  not  been 
lifted  from  where  they  were,  and  put  into  the  current  assets,  the 
current  liabilities  would  be  two  and  one-half  times  as  great  as 
the  current  assets,  and  that  wouldn't  look  good  on  any  balance 
sheet;  particularly  in  view  of  the  previous  notes,  in  which  I 
called  attention  to  the  fact  that  the  Fox  companies  had  actually 
received,  directly  after  I  had  sold  out,  new  funds  amounting  to 
$103,000,000  with  which  to  liquidate  their  maximum  liabilities. 
The  liabilities  had  been  well  advertised — by  cable,  by  telegram, 
by  radio,  by  newspapers,  by  mail,  by  whispering  and  loudly  speak- 
ing scandal-mongers,  as  $91,000,000.  In  fact  they  knew  that  the 
liability  was  not  that  great,  but  assuming  that  it  was  $91,000,000, 
there  was  a  balance  left  over  of  the  difference  between  $91,000,- 

000  and  $103,000,000,  which  would  leave  $12,000,000  of  cash  on 
hand.    I  have  shown  you  the  last  quarter's  earnings,  plus  the  non- 
recurring profit  earned  on  the  sale  of  the  First  National  shares, 
and  the  other  items,  which  make  it  clear  that  $30,000,000  should 
be  the  cash  on  hand.    But  instead  we  find  that  there  is  a  liability 
of  $16,637,895.78.    This  has  to  be  reduced  by  the  current  assets 
of  $6,000,000,  which  leaves  $10,000,000  more  to  be  accounted  for 
—a  total  of  $40,000,000  that  have  disappeared!" 

And  riow  as  to  Fox  Theatres,  and  what  the  Tinker  regime  has 
done  to  it, 

"In  looking  over  the  record  of  the  Fox  Theatres  Corporation, 

1  find  that  it  is  now  free  of  the  entire  group  that  had  acquired 
my  voting  shares ;  it  has  been  stripped  of  its  directors,  and  noth- 
ing but  employes  remain.     Whether  it  is  the  purpose  now  to 
push  the  responsibility  of  the  wreck  onto  the  shoulders  of  wage 
earners  of  this  company  or  not,  I  don't  know.    I  was  amazed  to 
read  that  Fox  Theatres,  which  had  occupied  from  its  very  incep- 
tion the  same  building  as  Fox  Film,  was  ordered  out  of  the  build- 
ing.    The  Chase  Bank  wants  nothing  more  to  do  with  Fox 


EMPTY  SHELLS  337 

Theatres.  They  practically  dispossess  it  Now  that  the  $75,000,- 
000  that  Fox  Theatres  received  from  the  sale  of  the  Loew  shares 
is  disposed  of,  and  the  strong-box  of  the  company  has  been 
looted,  and  every  asset  the  company  has  is  hypothecated,  the 
wreckers  are  now  ordering  the  junk  loaded  onto  trucks  and 
dumped  at  some  other  place." 

There  is  an  interesting  way  to  follow  the  fortunes  of  the  Fox 
companies,  by  noting  the  price  of  their  stocks  throughout  the 
long  series  of  developments  here  set  forth.  We  are  now  in  posi- 
tion to  appreciate  such  figures.  In  October,  1929,  just  before 
the  panic,  Fox  Film  A  stock  stood  at  101.  During  the  panic,  it 
dropped  to  a  low  of  40.  Then  it  came  back,  and  on  November 
9,  ten  days  after  the  panic,  it  stood  at  71.  But  now  came  the 
campaign  to  oust  the  Fox,  with  market  raids,  scandals  and  law- 
suits, and  during  January,  1930,  the  price  varied  from  32  down 
to  16.  In  February,  with  the  Lehman  financing  plan,  it  rose  to 
34.  On  March  4th,  the  day  before  the  stockholders'  meeting,  it 
was  36,  and  at  the  end  of  March,  after  Judge  Coleman  was  dis- 
qualified, it  was  26.  In  April,  after  W.  F.  sold  out  and  the 
Harley  Clarke  regime  came  in,  with  new  financing  and  wonderful 
promises,  it  climbed  to  57.  From  May  to  September  it  varied 
from  40  to  50;  and  then  began  the  long  slide.  In  January  of 
1931  Fox  Film  high  was  32,  in  July,  22,  in  October,  10,  in 
December,  5,  and  in  July,  1932,  $1.  Then  Wall  Street  got  up 
a  little  boom,  to  try  to  re-elect  Hoover,  and  Fox  Film  rose  to  $5. 
Now,  as  the  book  goes  to  press,  it  hangs  around  $2.  Thus,  in. 
three  years,  it  has  lost  98  per  cent  of  its  value. 


24 


REEL  TWENTY-EIGHT 
SUMMING  UP 

WE  are  now  in  position  to  sum  up  what  happened  to  the  Fox 
companies.  The  banking  group  which  saw  them,  coveted 
them,  conspired  to  get  possession  of  them,  and  succeeded  in  its 
conspiracy — that  group  plundered  them  of  considerably  more 
than  $100,000,000,  and  left  them  as  empty  shells.  We  have  seen 
$40,000,000  missing  from  Fox  Film,  and  $43,000,000  lost  by  the 
stockholders  of  that  company  when  they  were  deprived  of  their 
rights  to  the  stock  at  $30  a  share.  We  have  seen  $14,000,000 
missing  from  Fox  Theatres,  and  more  than  that  paid  as  com- 
missions to  the  various  bankers  on  the  various  financings  and 
refinancings  of  both  companies. 

Of  course,  a  part  of  these  sums  were  paper  profits.  The 
financiers  took  1,600,000  shares  of  Fox  Film  stock,  and  when 
the  shares  rose  to  $57,  they  figured  they  had  $91,200,000.  If 
they  held  on  too  long,  that  was  hard  luck  which  they  shared 
with  the  rest  of  the  upperclass  gambling  world;  but  it  does  not 
affect  the  conclusions  to  be  drawn  from  this  story.  They  meant 
to  make  the  profits,  and  legally  speaking  they  had  the  profits, 
£&gardless  of  subsequent  depreciations. 

You  will  recall  that  on  March  5,  1930,  Judge  Aaron  J.  Levy 
of  the  Supreme  Court  of  New  York  State  rendered  a  decision 
upon  the  moral  character  of  our  Fox.  This  decision  was  taken 
up  and  quoted  by  Halsey,  Stuart  in  so  many  affidavits  and  circu- 
lars to  their  customers  and  to  the  Fox  stockholders,  that  one  who 
studies  the  case  as  I  have,  comes  to  know  it  by  heart.  I  did 
not  stop  to  discuss  it  at  the  time,  because  we  did  not  then  have 
the  figures.  But  now  we  have  them,  and  can  deal  with  Judge 
Levy.  Said  he: 

"Here  we  have  a  little  $1,600  acorn  which  grew  into  a  sturdy 
$300,000,000  oak.  Why  was  not  well  enough  left  alone?  The 

338 


SUMMING  UP  339 

very  Fox  chopped  down  this  healthy  thriving  tree  with  his  own 
hatchet.  The  world  knows  much  about  avarice  and  cupidity, 
and  I  wonder  if  this  is  not  another  illustration.  May  he  now 
be  heard  to  complain?  Has  he  placed  himself  in  that  position 
which  justifies  his  assault  upon  the  character  of  men?  I  think 
not/' 

Well,  the  world  knew  much  about  avarice  and  cupidity  on 
March  5,  1930,  but  I  have  failed  in  my  purpose  in  this  book  if 
the  world  does  not  know  still  more  about  avarice  and  cupidity 
now.  Speaking  as  a  Socialist,  I  indict  the  whole  capitalist  world 
for  avarice  and  cupidity ;  I  say  that  these  qualities  are  the  founda- 
tion-stone upon  which  the  system  is  built.  Its  defenders  glory 
in  that  fact,  and  proclaim  the  profit  motive  and  self-interest  as 
the  necessary  basis,  the  only  possible  basis  of  an  economic  order. 
Their  college  professors  and  newspaper  editors  invent  high- 
sounding  names  with  which  to  dress  these  qualities ;  transforming 
avarice  and  cupidity  into  individual  initiative,  enterprise,  fore- 
sight, daring,  industry. 

Was  that  the  point  of  view  of  Judge  Levy?  Was  he  speaking 
as  a  social  revolutionist  indicting  our  system  of  wage  slavery  and 
exploitation?  I  think  not!  Judge  Levy  himself  would  be  the 
first  to  spring  forward  and  deny  such  evil  intentions. 

The  learned  justice  was  called  upon  to  decide  one 'question: 
whether  at  the  stockholders'  meeting  of  March  5,  1930,  William 
Fox  should  vote  the  B  shares  of  these  two  companies  himself, 
or  whether  they  should  be  voted  by  the  trusteeship  controlled 
by  Stuart  and  Otterson.  Therefore  the  only  meaning  of  any 
moral  judgment  was  to  compare  Stuart  and  Otterson  with  Fox, 
and  to  say  that  the  former  were  more  to  be  trusted  than  the 
latter.  That  this  was  the  actual  effect  of  the  judgment  was 
proved  by  the  use  which  Stuart  and  Otterson  made  of  the  deci- 
sion, before  the  stockholders  that  same  day,  before  other  courts 
in  future  days,  and  in  a  pamphlet,  of  which  they  printed  and 
circulated  tens  of  thousands  of  copies. 

Which  shall  we  say  displayed  the  greater  amount  of  avarice 
and  cupidity — William  Fox,  or  those  who  dispossessed  him  and 
took  over  his  companies?  William  Fox  planted  the  little  $1,600 
acorn,  and  he  watered  and  tended  it  until  it  had  grown  into  a 
$300,000,000  oak.  He  had  begun  with  some  Fox  Film  common 


340     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

stock  which  had  no  par  value,  and  in  fact  no  value  whatever; 
it  was  given  as  a  bonus  to  those  who  purchased  the  preferred 
stock  and  thus  made  the  enterprise  possible.  Every  year  he 
paid  $4  per  share  dividends  on  that  common  stock,  and  so  it 
acquired  value,  until  in  1928  it  reached  $119  a  share.  The  net 
earnings  of  the  company  grew  from  half  a  million  dollars  in 
1915  to  more  than  $13,000,000  in  1929.  It  had  begun  in  1914 
by  making  four  pictures  a  year,  and  in  the  end  was  making  one 
every  week;  the  rentals  of  these  pictures  rose  from  $272,000  in 
1914  to  more  than  $30,000,000  in  1929. 

Judge  Levy  found  fault  because  W.  F.  controlled  these  com- 
panies while  owning  only  5  per  cent  of  their  shares.  He  took 
those  figures  from  Stuart  and  Otterson's  affidavit,  and  they  hap- 
pened to  be  untrue;  they  were  based  upon  the  B  shares  only, 
whereas  W.  F.  tells  me  that  in  addition  to  the  B  shares,  he  owned 
approximately  5  per  cent  of  Film  A  stock  and  approximately 
10  per  cent  of  Theatres  A  stock.  But  what  difference  did  that 
make  to  the  stockholders? 

How  much  the  5  per  cent  ownership  really  had  to  do  with 
the  case  was  proved  by  the  outcome.  When  Fox  Film  and  Fox 
Theatres  were  made  subsidiaries  of  General  Theatres  Equipment 
Corporation,  the  control  of  both  companies  was  vested  in  three 
voting  trustees,  each  owning  a  single  share  of  stock,  the  market 
value  of  which  at  the  time  W.  F.  told  me  this  story,  was  37% 
cents  a  share.  It  sounds  incredible,  but  so  it  is ;  $1.12%  managed 
and  destroyed  a  corporation  whose  stock  in  1929  was  over 
$100,000,000.  When  Clarke  added  the  Fox  companies  to  his 
string  he  trebled  the  amount  controlled  by  the  voting  shares, 
but  he  did  not  thereby  save  the  concerns  from  bankruptcy. 

It  is  interesting  to  note  the  situation  as  to  stock  ownership 
of  Fox  Film  under  the  Clarke  regime.  How  much  confidence 
did  the  officers  and  directors  have  in  themselves?  On  March  31, 
1931,  Harley  Clarke,  president,  owned  one  share  of  A  stock; 
W.  C.  Michel,  vice-president  and  treasurer,  owned  one;  M.  C. 
Brush,  C.  W.  Higley,  and  W.  F.  Ingold,  directors,  one  share  each; 
J.  R.  Grainger,  vice-president,  none. 

W.  F.  has  shown  you  how,  in  less  than  two  years,  more  than 
$100,000,000  disappeared  from  the  treasury  of  his  companies* 
Some  of  it  was  paper  profits,  but  the  greater  part  was  real  money, 


SUMMING  UP  341 

and  somebody  got  it.  It  is  evident  that  somebody  meant  to  get 
it  from  the  beginning.  A  campaign  was  planned  and  ruthlessly 
carried  through,  the  outcome  of  which  was  the  wreckage  of  two 
prosperous  concerns,  and  the  reducing  to  beggary  of  many  thou- 
sands of  persons,  some  of  them  deserving.  I  appeal  the  judg- 
ment of  the  Supreme  Court  of  New  York  to  the  Supreme  Court 
of  Public  Opinion,  and  ask  again  which  side  displayed  the  greater 
amount  of  avarice  and  cupidity. 

As  my  farewell  to  Judge  Levy,  I  think  it  apropos  to  quote 
a  remark  made  to  me  twenty-five  years  ago  by  James  B.  Dill, 
at  that  time  one  of  the  five  justices  of  the  highest  court  of  the 
State  of  New  Jersey.  This  remark  had  nothing  to  do  with  Levy, 
who  was  an  obscure  young  lawyer  then,  but  it  has  to  do  with 
Judge  Levy's  court,  which  has  not  changed  very  much  in  twenty- 
five  years.  Bear  in  mind  that  Dill  was  not  merely  a  judge  on 
the  other  side  of  the  Hudson  River,  but  was  the  highest-paid 
corporation  lawyer  in  Wall  Street,  and  had  been  actively  dealing 
with  its  big  financiers  and  corporation  magnates  all  his  profes- 
sional life.  He  said :  "Sinclair,  there  are  twenty-two  judges  of 
the  Supreme  Court  of  New  York  State,  and  all  but  three  of 
them  are  owned.  I  can  -say  to  each  of  the  nineteen,  'I  know 
whose  man  you  are,  and  exactly  what  you  got  for  it/  and  not 
one  of  the  nineteen  would  dare  to  contradict  me/5 

There  are  a  number  of  other  persons  to  whom  we  have  to 
pay  our  adieus,  and  a  number  of  loose  ends  of  the  story  to  be 
knitted  together.  For  example,  those  eloquent  and  high-priced 
lawyers  who  did  such  a  beautiful  job  of  turning  over  the  Fox 
companies  to  the  wrecking  crew.  So  many  eloquent  appeals  they 
made  in  court,  so  many  learned  briefs  they  prepared — and  always 
and  everywhere  they  were  so  dignified,  high-minded,  and  impos- 
ing. But  when  they  got  through,  it  was  the  wrecking  crew  who 
paid  them — and  with  the  money  of  the  stockholders !  W.  F.  got 
the  facts  somehow  out  of  the  files  of  the  Fox  companies.  Hughes, 
Schurman  &  Dwight  got  a  total  of  $520,000;  the  Berenson 
brothers  of  Boston  got  a  quarter  of  a  million ;  Isador  J.  Kresel 
got  $50,000 — all  paid  by  the  Fox  companies  for  the  wrecking 
of  the  Fox  companies. 

As  I  said  before,  this  is  one  of  the  oddest  developments  I 
ever  heard  of  in  big  business  affairs.  I  know  of  only  one  thing 


342     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

to  equal  it,  and  that  is  when  our  great  water  and  gas  and  light 
and  power  and  telephone  trusts  go  into  what  they  call  "educa- 
tional" activities ;  buying  newspapers  and  college  professors  and 
other  lecturers,  and  compelling  the  consumers  of  water  and  gas 
and  light  and  power  and  telephones  to  pay  the  cost  of  the  poison- 
ing of  their  own  minds. 

In  May  of  1932  the  Irving  Trust  Company  was  appointed 
receiver  for  the  Fox  Metropolitan  Playhouses,  Inc.,  the  principal 
subsidiary  of  Fox  Theatres,  operating  its  175  theatres  in  and 
about  New  York  The  same  fate  befell  Fox  Brooklyn,  Fox 
Detroit,  and  Fox  St.  Louis.  On  June  22,  1932,  Fox  Theatres 
itself  went  into  the  hands  of  an  equity  receiver,  upon  a  petition 
filed  by  the  Chicago  Title  &  Trust  Company,  a  creditor  claiming 
$410,190.  The  usual  claim  is  made,  that  the  assets  of  the  concern 
exceed  its  liabilities;  the  stockholders  will  know  in  due  course 
whether  that  is  true,  I  note  the  significant  item  that  "invest- 
ments in  subsidiary  companies  in  the  hands  of  receivers  or 
trustees  and  in  real  estate  on  which  mortgage  defaults  have  been 
made,  are  listed  at  $21,360,000."  Oddly  enough,  the  petition  for 
an  equity  receiver,  agreed  to  by  Fox  Theatres,  was  prompted 
by  the  fear  that  an  "unnamed  creditor"  might  file  a  judgment, 
and  this  person  was  rumored  to  be  our  old  friend  Blnmy,  demand- 
ing $355,000  as  part  of  his  price  for  putting  over  the  Loew  stock 
deal  in  ,1929. 

Also  W.  F.  thinks  I  should  say  a  few  words  abotit  the  Roxy 
Theatre,  which  was  owned  by  Fox  Theatres.  "Roxy"  was  a 
radio  announcer  who  became  popular  and  had  a  wide  audience. 
He  used  that  pull  to  raise  money  for  the  building  of  what  was 
to  be  the  biggest  and  grandest  motion  picture  theatre  in  the  world. 
Thirteen  thousand  people,  mostly  workers,  took  Roxy^s  word  for 
it,  and  bought  stock  in  the  enterprise.  The  time  came  when  the 
Radio  Corporation  of  America  and  the  Rockefeller  interests 
decided  upon  the  enterprise  known  as  Rockefeller  Center;  a  part 
of  it  was  to  be  the  biggest  and  grandest  motion  picture  theatre 
in  the  world,  located  only  four  or  five  hundred  feet  away  from 
the  Roxy  Theatre.  The  Rockefellers  wanted  Roxy  to  manage  it, 
so  they  bought  him  away  from  his  own  enterprise,  and  now  the 
Roxy  Theatre  concern  is  bankrupt,  and  the  13,000  inTOStars 
see  their  holdings  wiped  out. 


SUMMING  UP  343 

Here  is  a  table  of  the  bonds  of  Fox  Theatres  subsidiaries, 
showing  the  prices  at  which  they  were  sold  to  the  public,  and  the 
prices  at  which  they  now  stand.  These  are  the  $36,000,000  worth 
of  bonds,  which  Halsey,  Stuart  unloaded  upon  their  clients.  Of 
course,  the  panic  was  the  principal  cause  of  the  decline;  btit  I 
think  the  ousting  of  Fox  had  some  part  in  it  also. 

Bonds  Sold  at  Now 

Fox  Los  Angeles  Studio 100  50 

Fox  Detroit  Bldg 97%  7 

Fox  St.  Louis  Bldg 100  8 

New  Eng.  Poli  Circuit 100  10 

Fox  Metropolitan,  N.  Y 99  7 

Roxy  Theatre 99%  8 

As  to  Fox  Film,  Harley  Clarke  has  been  ousted  entirely,  and 
Tinker  moved  up  to  the  post  of  chairman  of  the  board;  a  new 
president  has  been  put  in,  Sidney  R.  Kent,  an  oldtimer,  formerly 
production  manager  of  Paramount.  The  value  of  Paramount 
stock,  $2  per  share,  hardly  seems  to  promise  much  for  Fox  Film, 
Kent  is  a  forceful  man,  at  least  as  a  speaker,  and  devotes  his 
oratory  to  convincing  the  moving  picture  world  that  it  must 
prepare  for  drastic  salary  cuts.  The  newspapers  out  here  give 
glowing  accounts  of  the  prospects  of  Fox  Film,  based  on  the  fact 
that  Kent  has  taken  charge,  and  that  Winfield  R,  Shee&an,  hav- 
ing had  his  liver  cured,  has  resumed  his  duties  as  production 
manager.  Kent  has  said  nothing  regarding  his  attitude  toward 
the  question  of  a  cut  in  that  contract  of  Sheehan  which  provides 
that  this  year  he  is  to  receive  $350,000;  in  1933  $400,000;  and  in 
1934  $500,000. 

The  Loew  shares  have  been  turned  over  to  a  separate  organi- 
zation, known  as  Film  Securities  Corporation,  controlled  by  three 
trustees  appointed  by  the  Federal  court.  Thus  the  Department 
of  Justice  is  satisfied  that  the  anti-trust  laws  are  being  respected. 

The  British  Gaumont  shares  were  lost,  and  Fox  Film  is  now 
suing  Ostrer  in  London  to  recover  £4,000,000  invested  in  that 
deal. 

General  Theatres  Equipment  is  in  the  hands  of  a  receiver. 
It  is  a  corporation  formed  tinder  the  laws  of  the  State  of  Dela- 
ware, which  permit  you  to  do  anything.  Now  there  has  been 
filed  with  the  Court  of  Chancery  of  the  State  of  Delaware  in  and 


344     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

for  Newcastle  County,  a  complaint  of  the  bondholders'  commit- 
tee, through  their  attorney,  Harold  L.  Fierman,  asking  that  the 
court  instruct  the  receiver  to  bring  suit  against  the  Chase  National 
Bank  and  the  Chase  Securities  Corporation  to  recover  the  sum 
of  $14,000,000,  representing  damages  which  General  Theatres 
Equipment  sustained  through  wrongful  actions  of  the  Chase 
concerns. 

The  long  affidavit  recites  the  story  of  the  Fox  financing,  and 
it  appears  that  the  banking  group  who  were  plundering  the  Fox 
companies  were  also  plundering  General  Theatres  Equipment. 
You  will  recall  that  General  Theatres  Equipment  got  1,160,000 
shares  of  Fox  Film  stock,  and  the  banking  crowd  got  440,000 
shares.  General  Theatres  Equipment  was  not  permitted  to  sell 
its  stock,  but  held  it  to  enable  the  bankers  to  get  rid  of  theirs 
at  a  generous  profit.  Instead  of  selling  its  stock,  General  The- 
atres Equipment  borrowed  $10,000,000  from  the  Chase  National 
Bank,  and  put  up  the  stock  as  collateral,  and  more  and  more 
stock  was  called  for,  until  the  bank  now  has  most  of  the  assets 
of  the  company.  This  process  could  be  carried  out  because  of 
the  fact  "that  at  the  time  this  transaction  took  place,  a  majority 
of  the  directors  of  the  corporation  were  under  the  control  and 
domination  of  the  Chase  National  Bank,  by  reason  of  the  fact 
that  the  Chase  National  Bank  held  assignments  of  the  participa- 
tion agreements  of  the  various  companies,  in  which  a  majority 
of  the  directors  were  substantially  or  vitally  interested."  Later 
on  the  Chase  Bank  practically  admitted  its  responsibility,  .by  sur- 
rendering its  claims  to  this  collateral,  and  taking  the  same  shares 
as  the  bondholders  are  getting  in  the  reorganization  plan. 

Harley  L.  Clarke  of  Chicago  is  supposed  to  be  ruined.  But 
W.  F.,  who  knows  him  well,  has  his  doubts  on  the  point;  he 
thinks  Clarke  surely  has  money  put  away.  He  thinks  that  Clarke's 
losses,  advertised  at  $100,000,000,  were  purely  paper  losses.  (We 
have  arrived  at  a  peculiar  stage  of  culture,  where  a  man's  social 
position  is  established  by  the  amount  of  money  he  can  boast  of 
having  lost.)  W.  F.  tells  of  several  conversations  with  Clarke 
on  the  subject  of  General  Theatres  Equipment  stock.  "He  told 
me  one  day  that  the  value  of  the  shares  which  he  had  lost  was 
$37,000,000.  Some  time  later  he  evidently  forgot  what  he  had 
told  me,  and  this  time  he  said  his  loss  was  $27,000,000.  A  third 


SUMMING  UP  345 

time  he  told  me  it  was  $17,000,000.  Some  of  those  who  were 
close  to  him  told  me  they  didn't  believe  that  he  lost  one  real  dollar 
in  the  enterprise;  he  merely  lost  the  market  value  of  shares 
which  had  cost  him  nothing/' 

W.  F.  still  continues  business  relations  with  his  "dear 
Harley" ;  because  Harley  had  agreed  to  pay  him  $3,000,000  as  a 
substitute  for  his  participation  in  Fox  Film  financing,  and  the 
payment  was  made  in  the  form  of  ten  one-year  notes  for  $300,000 
each,  and  long  before  the  year  was  out,  "dear  Harley"  was  at  the 
end  of  his  rope.  W.  F.  had  given  one  of  these  notes  to  his  friend 
Greenfield  as  a  commission  on  the  deal,  and  Greenfield  was  so 
lucky  as  to  sell  it  without  recourse.  Says  W.  F. :  "I  tried  to  sell 
mine,  but  couldn't.  I  tried  the  Chase  Bank  where  the  notes  were 
payable,  but  they  wouldn't  buy  them.  Wherever  I  offered  to  sell 
these  notes,  they  would  call  up  the  Chase  Bank  and  inquire 
whether  they  would  be  paid  when  due.  The  Chase  Bank  was 
unable  to  give  the  information." 

This  entanglement  with  Clarke  was  the  means  01  getting 
W.  F.  a  lot  of  information  about  Chicago  financial  methods,  also 
Los  Angeles  and  Hollywood  financial  methods.  But  that  is  a 
long  story,  and  it  would  seem  that  Wall  Street  is  enough  for  one 
book.  In  bidding  farewell  to  Harley  L.  Clarke  of  Chicago,  I 
quote  W.  F/s  final  sentence :  "He  is  now  rather  a  pathetic  fig- 
ure,-because  he  recogni2es  that  he  has  been  ousted/' 

Also  there  is  a  story  for  me  to  tell  about  W.  F/s  friend, 
Albert  M.  Greenfield,  president  of  the  Bankers'  Securities  Cor- 
poration of  Philadelphia.  You  will  recall  that  Greenfield's  con- 
cern loaned  W^-F.  $10,000,000,  and  waited  for  the  money,  refus- 
ing to  bring  any  suit ;  also  Greenfield  was  W.  F/s  "contact  man," 
and  was  tireless  in  trying  to  help  him  out  of  his  difficulties.  He 
was  the  agent  for  the  sale  of  the  First  National  shares  to  Warner 
Brothers,  and  at  the  end  for  the  sale  of  the  voting  shares  to 
Harley  Clarke.  Greenfield  was  acting  as  a  friend,  but  when  he 
discovered  that  Blumenthal  had  had  a  contract  in  his  pocket  for 
$600,000,  if  and  when  W.  F.  sold  his  voting  shares  to  Clarke, 
Greenfield  went  to  Clarke  and  told  him  that  this  was  unfair,  and 
that  if  there  was  to  be  a  commission,  Greenfield  should  have  half, 
and  the  result  was  that  Blumenthal  was  forced  to  give  Greenfield 
$250,000. 


346     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

When  this  was  all  over,  W.  F.  warned  Greenfield  to  watch  his 
step,  the  banking  ring  would  certainly  punish  him;  and  sure 
enough,  they  did  it  that  very  summer.  Greenfield  was  organizer 
of  the  Bankers  Trust  Company,  which  had  some  $18,000,000  of 
deposits.  Another  Philadelphia  bank  was  in  trouble,  and  the  ring 
persuaded  Greenfield  to  merge  this  bank,  with  its  thirteen 
branches.  Soon  thereafter  came  rumors  that  the  Bankers  Trust 
was  in  trouble,  and  people  began  withdrawing  their  funds,  not 
only  from  that  bank,  but  from  all  the  thirteen  branches  of  the 
merged  bank.  As  W.  F.  says,  "Money  goes  fast  when,  there  are 
thirteen  men  handing  it  out." 

W.  F.  went  to  Philadelphia  one  Thursday  to  try  to  help  his 
friend,  and  told  me  a  long  story  of  his  labors  Friday,  Saturday 
and  Sunday.  He  addressed  a  meeting  of  the  ruling  bankers,  at 
which  he  pleaded  for  his  friend,  pointing  out  to  them  what  it 
would  mean  to  the  state's  banking  system  if  these  two  banks 
went  to  the  wall.  It  was  on  Sunday  night,  in  the  board  room  of 
the  largest  bank  in  Philadelphia,  controlled  by  Drexel  &  Com- 
pany, the  partners  of  Morgan — "right  in  the  center  of  the  old 
spider's  web  1"  says  W.  F. 

"At  about  3  o'clock  in  the  morning,  I  realized  as  clearly  as  it 
was  possible  that  the  destruction  of  Greenfield  had  to  occur,  and 
I  made  up  my  mind  to  test  it  to  see  whether  I  was  right.  I  arose 
and  made  the  most  eloquent  address  of  my  life  in  behalf  of 
Greenfield  and  the  125,000  poor  depositors  in  the  city  of  Phila- 
delphia. I  said  that  if  they  permitted  this  bank  to  close  its  doors 
tomorrow,  they  would  start  a  fire  in  the  town.  *You  will  have 
125,000  depositors  who  are  going  to  be  upset.  You  "will  find 
your  newspapers  printing  nothing  else.  You  will  find  a  run  on 
every  bank  in  Philadelphia.  You  might  think  you  are  out  of 
range  qf  this  thing;  I  tell  you  that  that  is  not  so.  I  am  not  here 
merely  because  I  want  to  help  Greenfield ;  I  am  here  in  behalf 
of  the  men,  women  and  children  who  have  their  money  not  only 
in  this  bank,  but  in  every  other  bank  in  Philadelphia/ 

"I  pointed  out  what  a  terrible  condition  had  arisen  in  New 
York  when  the  Chase  Bank  and  others  decided  the  Bank  of  the 
United  States  must  be  closed;  every  bank  in  New  York  was 
affected.  This  would  not  only  start  a  run  in  Philadelphia,  but  it 
would  be  a  story  for  the  whole  state  of  Pennsvlvank.  and  would 


SUMMING  UP  -         347 

start  other  runs.  I  made  the  following  proposal :  'Gentlemen,  yon 
claim  all  this  while  that  Greenfield  has  $4,000,000  worth  of  bad 
debts  on  his  books.  I  think  you  are  wrong;  I  think  a  careful 
survey  will  show  you  that  he  probably  has  more.  It  will  probablj 
run  to  $5,000,000.'  They  were  sure  that  it  was  only  $4,000,000— 
that  was  more  than  sufficient  to  take  care  of  those  debts.  I  said 
I  would  loan  $1,000,000  of  rny  personal  money.  I  said:  'I  have 
just  talked  to  Greenfield,  and  he  says  that  when  you  liquidate  his 
bank,  if  at  that  time  there  is  any  loss  incurred  by  you,  he  per- 
sonally will  give  you  a  guarantee  for  $1,500,000,  and  will  col- 
lateralize  that  guarantee  at  this  time,  I  have  requested  Greenfield 
to  do  that,  to  show  his  willingness  to  help  the  situation.  After 
you  have  used  up  his  one  million  and  a  half,  you  will, have  my 
million  dollars,  which  you  can  have  in  cash  or  collateral/ 

"While  I  was  making  this  address,  which  I  thought  most 
eloquent,  I  noticed  the  president  of  the  second  largest  bank  iia 
Philadelphia  take  his  handkerchief  out  of  his  pocket,  presumably 
wiping  his  face,  and  place  it  to  the  right  hand  side  of  his  mouth> 
and  then  grin  and  laugh  and  smile  at  the  head  of  the  largest  bank, 
the  Drexel  Bank/' 

W.  F.  was  sure  that  these  bankers  were  going  to  wreck 
Greenfield,  and  he  decided  to  make  an  appeal  to  Herbert  Hoover : 

"I  waited  until  about  8  o'clock  the  next  morning,  when  I 
thought  the  President  would  be  at  his  breakfast  table.  I  called 
him  on  the  'phone ;  his  secretary  said  he  had  instructions  not  to 
disturb  him.  I  requested  that  the  secretary  give  him  my  name  at 
the  breakfast  table,  and  let  the  President  say  whether  or  not  be 
wanted  to  be  disturbed.  A  few  minutes  later  the  President  came 
to  the  'phone.  I  had  in  a  brief  way  told  him  what  was  occurring 
to  Greenfield.  Since  I  had  known  of  this  since  Thursday,  he  now 
severely  criticized  me  for  not  coming  to  him  promptly.  By  this 
time  it  was  8 :15  and  the  Bankers'  Trust  never  opened.  I  learned 
later  that  President  Hoover  had  made  a  strenuous  effort  to  locate 
those  who  might  be  of  help  before  9  o'clock,  but  that  the  time 
was  too  short." 

Of  course,  it  may  have  been  pure  coincidence  that  it  was  a 
friend  of  William  Fox  who  was  in  the  center  of  that  crash ;  just 
as  it  may  have  been  pure  coincidence  that  the  only  two  bankers 
in  New  York  who  showed  sympathy  for  our  Fox,  Edward  RotJ*- 


348     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

schild  of  the  Chelsea  Bank,  and  Bernard  Marcus  of  the  Bank  of 
the  United  States — were  driven  out  of  the  banking  business,  and 
Marcus  landed  in  jail.  The  result  of  that  crash  in  Philadelphia 
was  that  there  was  a  run  on  every  bank  in  the  city  and  in  the 
surrounding  towns,  and  something  like  a  dozen  banks  were  com- 
pelled to  close  their  doors ;  but  of  course  not  Drexel  &  Company, 
the  partners  of  the  Morgans.  The  Morgans  banks  will  be  the 
last  in  the  United  States  to  close  their  doors — and  yet  it  is  my 
belief  that  some  day  they  will  close  their  doors ! 


REEL  TWENTY-NINE 

AFTERMATH 

IT  is  proving  a  difficult  matter  to  finish  this  book,  because  it 
keeps  on  happening.  Fate,  the  busy  spider,  spins  out  new 
threads  faster  than  I  can  put  them  into  the  web. 

While  W.  F.  was  telling  his  story  in  my  home,  a  committee 
of  the  United  States  Senate  began  an  investigation  of  stock- 
market  operations — particularly  short  selling — and  put  on  the 
stand  various  independent  operators,  including  Percy  Rockefeller 
and  Matthew  C.  Brush.  W.  F.  brought  a  copy  of  the  morning 
paper  to  my  home  and  said  that  this  "Matt"  Brush  had  led  raids 
on  Fox  Film  stock  during  the  worst  of  W.  F.'s  troubles.  He 
said  that  he  would  like  to  know  whether  such  gentlemen  as  Harry 
Stuart,  Harley  Clarke  and  Albert  Wiggin  had  been  in  the  "pools" 
which  had  been  raiding  his  securities.  I  thought  that  this  might 
be  a  proper  question  for  the  committee  to  investigate,  and  offered 
to  telegraph  the  suggestion.  W.  F.  approved  my  idea,  and  a 
telegram  was  sent  to  Senator  Couzens,  who  wrote  me  that  the 
matter  would  be  taken  up. 

Soon  after  W.  F.'s  return  to  New  York,  he  received  a  request 
from  William  A.  Gray,  counsel  for  the  Senate  committee,  to 
come  to  Gray's  office  for  questioning.  He  went  on  June  8,  1932, 
and  I  have  before  me  a  transcript  of  his  examination.  It  appears 
that  Mr.  Gray,  a  criminal  lawyer  of  Philadelphia,  has  very  little 
interest  in  the  doings  of  the  great  and  powerful  concerns  which 
wrecked  the  Fox  companies,  but  is  interested  in  getting  after 
William  Fox,  and  trying  to  prove  that  Fox  himself  was  respon- 
sible for  the  wrecking  of  his  companies.  It  appears  that  W,  F. 
has  a  great  number  of  brokers'  accounts,  and  that  he  has  bought 
and  sold  large  quantities  of  Fox  securities,  and  Mr.  Gray  wants 
to  know  all  about  it,  and  goes  after  the  information  in  the  fashion 
of  criminal  lawyers.  He  asks  great  numbers  of  questions  about 

349 


350     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

stock  deals  which  have  taken  place  three  years  previously,  and 
seems  indignant  that  W.  F.  hasn't  at  his  finger-tips  the  figures 
of  some  thirty  brokers  accounts  of  his  own  and  his  relatives. 
W.  F.  had  to  explain  to  him:  "I  was  deprived  of  my  records, 
the  company  was  captured  and  I  had  no  control  and  have  no 
control  of  the  records  now. 

"Q.     Personal  records? 

UA.     Everything  I  had  is  in  their  hands. 

"Q.     Whose  hands? 

"A.     In  the  hands  of  my  enemies. 

"Q.     Who  got  your  personal  records  ? 

"A.  My  personal  files  are  intermingled  with  the  company's 
files,  and  they  are  lying  there  now,  and  we  must  beg  and  plead 
to  go  through  the  files  for  an  individual  letter.  If  you  had 
known  all  I  had  gone  through  from  the  day  I  met  with  that  acci- 
dent until  I  sold  out,  you  will  recognize  I  have  no  way  of  answer- 
ing many  questions  you  asked.  I  have  no  way  and  it  is  humanly 
impossible." 

I  will  let  W.  F.  tell  you  in  his  own  words  about  these  hear- 
ings, beginning  with  his  first  visit  to  Gray,  Writing  to  me,  he 
says: 

"I  told  Mr.  Gray  I  was  delighted  that  he  had  sent  for  me, 
and  that  I  had  a  story  to  tell  the  American  people.  I  asked 
whether  he  knew  you  had  written  to  Senator  Couzens.  His  reply 
to  that  question  made  it  clear  what  his  attitude  would  be  to  me. 
He  resented  my  mentioning  either  your  name  or  Couzens'  name, 
He  said  that  that  matter  he  would  take  up  later;  he  was  the 
lawyer  for  the  Senate  committee,  and  he  would  carry  on  the 
investigation  in  his  own  way. 

"I  am  wondering  now,  is  it  possible  that  Hughes,  Schurman 
&  Dwight  had  called  on  Mr.  Gray  and  supplied  him  with  a  list 
of  questions  that  should  be  asked  of  Fox  about  matters  wholly 
irrelevant  to  short  selling  on  the  New  York  Stock  Exchange. 
For  every  claim  subsequently  made  in  the  complaints  of  Fox 
Theatres  and  Fox  Film  against  William  Fox  was  at  the  finger- 
tips of  Mr.  Gray,  the  attorney  for  the  Senate  investigation  com- 
mittee. Up  to  this  time,  you  understand,  I  had  not  been  sued 
either  by  Fox  Theatres  or  by  Fox  Film.  It  was  only  after  Gray 
had  interrogated  me  for  about  three  hours  with  heaps  and  heaps 


AFTERMATH  351 

of  questions,  that  I  received  a  summons  of  the  Fox  Theatres 
Corporation. 

"Many  of  the  questions  that  Gray  asked  were  such  that  I 
would  have  to  refresh  my  memory  and  examine  my  books  so 
that  I  could  answer  them  correctly.  At  the  conclusion  of  this 
first  examination  Mr.  Gray  was  kind  enough  to  give  me  a  sub- 
poena to  appear  in  Washington.  Attached  was  a  complete  list  of 
all  the  records  he  would  like  to  have  me  bring  along.  Every- 
thing he  asked  for  was  what  Fox  Theatres  and  Fox  Film  required 
in  their  lawsuits.  Here  was  going  to  be  a  great  haul.  And 
please  bear  in  mind  that  when  you  sit  in  the  chair  at  one  of 
these  Senate  investigations  you  have  no  right  to  representation. 
Hughes,  Schurman  &  Dwight  were  going  to  try  their  case  before 
the  Senate  committee,  without  my  having  a  right  to  defend  my- 
self;  my  counsel  was  not  to  be  heard.  That  is  a  fine  trap  to 
be  caught  in;  a  fine  trick  for  the  United  States  Government  to 
lend  itself  to.  The  octopus,  of  course,  knew  all  about  this. 

"Under  my  subpoena  I  was  due  to  go  before  the  Senate  the 
following  Wednesday.  But  Reass  told  me  that  Gray  had  not 
gone  to  Washington,  and  would  like  to  see  me  again  in  New 
York.  So  I  went  to  Gray,  with  the  answers  to  most  of  the  ques- 
tions asked  of  me  at  the  previous  meeting.  During  the  first 
meeting  a  stenographer  had  taken  our  minutes  and  Mr.  Gray  was 
kind  enough  to  say  that  I  could  have  a  copy.  During  the  second 
meeting,  after  he  had  proceeded  for  about  one  hour,  I  recalled 
that  we  had  failed  to  ask  whether  we  could  have  a  copy  of  these 
minutes.  We  asked  him.  He  promptly  told  me  no;  that  we 
were  to  meet  in  Washington  tomorrow,  and  the  stenographer  did 
not  have  time,  and  she  was  not  physically  able  to  transcribe  her 
notes  in  time  to  give  us  a  copy.  I  asked  that  proceedings  be 
halted  so  that  we  could  get  somebody  who  would  make  for  us 
a  copy  of  these  proceedings. 

"You  will  bear  in  mind  that  I  was  under  no  obligation  to 
call  on  Gray  or  to  talk  to  Gray.  The  only  rights  he  had  were 
to  serve  me  with  a  subpoena  to  appear  before  the  Senate  com- 
mittee in  Washington  and  there  ask  his  questions.  I  made  both 
these  calls  because  you  had  written  your  letter  to  Senator  Couzens 
asking  for  the  privilege  of  my  being  heard.  When  the  second 
stenographer  came,  Gray  began  bombarding  me  again  with  many 


352     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

things  that  had  entirely  passed  out  of  my  mind,  and  then  it 
became  clear  to  me  that  he  was  not  investigating  short  selling 
on  the  New  York  Stock  Exchange,  but  that  the  information 
brought  out  would  enable  Hughes,  Schurman  &  Dwight  and 
Max  D.  Steuer  to  draw  their  complaints  properly. 

"There  were  matters  involving  many  millions  of  dollars  in 
these  suits  against  me ;  but  even  so,  I  decided  that  I  was  going 
to  Washington  to  appear  before  the  Senate  committee ;  you  had 
issued  a  challenge  and  I  was  going  to  back  you  up.  You  must 
bear  in  mind  I  was  no  longer  under  any  subpoena ;  my  subpoena 
had  expired  on  Wednesday,  and  Gray  had  not  given  me  a  new 
one.  But  I  was  going  to  Washington  without  any  subpoena, 
voluntarily,  as  I  had  on  the  two  occasions  appeared  before  Gray. 

"I  left  New  York  by  auto  at  6  o'clock  in  the  evening  and 
arrived  in  Washington  at  3  o'clock  in  the  morning.  I  was  foolish 
to  do  that.  It  rained  all  the  way.  It  would  have  been  better  to 
go  by  train.  By  the  time  I  came  to  Washington  I  was  ill.  I 
looked  for  a  doctor  that  morning  at  3 :30.  I  inquired  from  the 
clerk  at  the  desk  of  the  hotel  and  asked  for  the  house  doctor. 
He  came  at  9  o'clock,  and  found  me  suffering  with  pains  in  gall 
bladder  and  appendix,  and  called  it  biliousness  and  gave  me  a 
dose  of  calomel.  Gray  did  not  believe  I  was  ill,  so  he  sent  two  of 
his  own  physicians  to  examine  me.  They  concurred  in  the  opinion 
of  the  hotel  doctor  that  I  was  ill.  The  next  day  the  hotel  doctor 
sent  for  a  diabetic  specialist,  took  my  blood  test,  and  found  I 
had  a  blood  sugar  content  of  .250.  The  doctor  wanted  to  know 
whether  I  was  his  patient.  I  told  him  I  was.  *If  you  are  my 
patient/  he  said,  'I  prohibit  you  from  going  anywhere  where  you 
will  have  a  mental  disturbance/ 

"I  was  anxious  to  go  before  the  Senate  committee,  particu- 
larly after  I  had  read  the  proceedings  of  the  two  days.  But  my 
doctors  told  me  they  forbid  me  to  leave  my  room;  they  told  me 
I  might  develop  into  a  permanent  diabetic,  and  worse  still  I  might 
go  into  a  coma;  that  if  I  was  his  permanent  patient  or  a  relative 
of  his,  he  would  prevent  me  from  going  before  the  Senate  commit- 
tee. It  is  a  customary  matter  during  any  of  these  investigations 
to  permit  any  one  who  is  in  poor  health  and  cannot  appear,  to 
file  a  written  report  either  confirming  or  denying  the  charges 
made.  But  in  reading  over  the  proceedings  in  one  of  Gray's 


AFTERMATH  353 

closing  addresses,  I  discover  him  making  the  request  that  the 
committee  should  not  grant  me  the  privilege  of  filing  a  report. 
I  am  sure  the  Senate  will  not  grant  his  request,  but  that  I  will 
have  the  privilege  of  filing  my  report,  which  I  hope  to  do  in  the 
form  of  your  book." 

At  the  hearings  before  the  Senate  committee,  Gray  produced 
the  evidence  gathered  from  W.  F.'s  brokerage  accounts.  It 
appeared  that  he  had  been  a  member  of  various  pools  which  had 
traded  in  the  stocks  of  Fox  Film  and  Fox  Theatres,  and  also 
of  Loew's,  Inc.  One  of  these  pools  had  included,  among  others, 
John  J.  Raskob,  Walter  P.  Chrysler,  and  Nicholas  F.  Brady. 
This  pool  had  made  a  profit  of  $1,937,000.  I  quote  from  the 
Associated  Press  dispatch  of  June  17: 

"Mr.  Fox  had  freely  admitted  to  him,  Mr.  Gray  said,  that  he 
manipulated  Fox  stocks  to  maintain  a  public  market;  that  he 
believed  short  selling  a  rotten  practice,  but  that  he  would  continue 
it  as  long  as  the  New  York  Stock  Exchange  permitted  it,  and 
that  he  would  do  it  again." 

The  effort  was  made  by  Gray  to  show  that  this  had  been  in 
effect  a  "bear"  operation.  I  quote  from  the  account  in  "Time/* 
June  27,  1932: 

"Manager  Ellsworth  patiently  explained  that  this  pool  had 
been  formed  to  market  Fox  stock  to  finance  Fox  expansion. 
Holding  an  option  on  500,000  shares  from  Cineman  Fox,  the 
pool  sold  466,000  shares  'technically'  short  against  the  option,  the 
balance  covered  in  the  open  market.  Manager  Ellsworth  said 
that  the  additional  short  interest  had  been  built  up  to  enable  the 
pool  to  support  the  market,  if  necessary,  not  to  depress  it.  He 
pointed  out  that  the  pool  could  have  covered  from  the  option  at 
all  times.  On  the  total  operation  the  pool  cleared  $1,937,000. 

"Manager  Ellsworth  admitted  having  spent  $24,000  for  pub- 
licity, advising  the  public  that  'they  could  buy  for  $30  a  share  of 
stock  which  we  thought  would  sell  at  $60.'  When  Senator  Couzens 
asked  why  the  pool  itself  did  not  wait  for  the  profit,  Witness 
Ellsworth  snapped :  'My  business  isn't  to  wait — it's  to  sell  !' 

"Frustrated  in  its  attempt  to  prove  that  Cineman  Fox's  mar- 
ket manipulations  had  destroyed  his  companies,  or  that  he  had 
been  a  bad  Bear,  the  Committee  pounced  on  alleged  income  tax 
evasions.  Counsel  Gray  said  that  Cineman  Fox  deducted  market 


354     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

losses  from  his  personal  returns  which  had  been  paid  by  Fox 
Film/' 

This  is  a  question  with  which  I  am  not  going  to  attempt  tc 
deal ;  I  gave  up  my  efforts  to  understand  the  income  tax  regula- 
tions some  time  ago,  when  I  discovered  that  the  Treasury  Depart- 
ment considers  that  when  an  author  has  written  a  book  and 
receives  royalties  upon  it  from  his  publishers,  those  royalties  are 
"unearned  income" ! 

What  interests  me  about  this  senatorial  investigation  is  the 
fact  that  the  committee  apparently  has  no  interest  in  the  large 
scale  operations  of  the  great  financial  powers,  such  as  Chase 
National  Bank  and  Chase  Securities  Company,  but  is  only  inter- 
ested in  the  speculations  of  the  small  independents.  Of  course 
it  is  worthwhile  to  know  how  Harry  Warner  and  his  brothers 
made  $9,000,000  selling  their  own  stocks  short,  and  how  they  got 
rid  of  their  stocks  and  took  instead  the  debentures  of  their  con- 
cern, so  that  they  are  not  involved  in  its  depression.  But  how 
much  more  important  it  would  be  to  know  how  the  House  of 
Morgan  and  the  Chase  Bank  and  the  big  investment  houses,  such 
as  Halsey,  Stuart,  and  Dillon,  Read,  and  Goldman,  Sachs,  and 
Hayden,  Stone  have  unloaded  tens  of  billions  of  dollars  of  worth- 
less stocks,  both  foreign  and  domestic,  upon  the  small  country 
banks  and  the  small  investors,  and  used  their  vast  resources  to 
manipulate  these  stocks  on  the  market ! 

With  regard  to  the  suits  of  Fox  Film  and  Fox  Theatres 
against  William  Fox,  it  must  be  explained  that  in  the  purchase 
of  the  San  Francisco  Theatre,  and  of  the  Roxy  Theatre  in  New 
York,  W.  F.  had  personally  endorsed  the  notes,  and  therefore 
was  liable  for  the  results  of  the  mismanagement  of-  these  theatres. 
The  owner  is  now  Fox  Theatres,  and  the  owner  of  Fox  Theatres 
is  General  Theatres  Equipment,  now  being  reorganized  in  the 
interest  of  the  bondholders.  W.  F.  charged  deliberate  misman- 
agement of  the  two  theatres  and  therefore  refused  to  "go  along" 
with  the  reorganization  plans,  so  far  as  concerned  the  note  for 
$2,300,000  which  he  had  left  over  from  his  debts  with  Harley 
Clarke.  W.  F,  informed  Mr.  Breed,  the  lawyer  representing  the 
bondholders,  that  he  intended  to  sell  at  public  auction  the  collat- 
eral which  he  held,  consisting  of  Fox  Film  shares,  and  Clarke's 
half  interest  in  the  Grandeur  Company, 


AFTERMATH  355 

"I  likewise  informed  him  that  from  April  7,  1930,  up  to  this 
present  day  my  lips  had  been  sealed,  but  that  I  no  longer  intended 
to  keep  quiet;  that  it  was  my  purpose  to  instruct  my  attorney 
to  immediately  begin  suit  against  all  the  original  directors  of  the 
Fox  Theatres  Corporation,  Fox  Film  Corporation,  General  Thea- 
tres Equipment  Co.,  Chase  Securities  Co.,  Chase  Bank,  and  any 
one  else  who  had  anything  to  do  with  the  management  of  these 
enterprises;  that  I  was  the  owner  of  100,000  shares  of  Fox 
Theatres,  50,000  shares  of  Fox  Film,  40,000  shares  of  General 
Theatres  Equipment  and  20,000  shares  of  Loew,  and  I  was  going 
to  begin  such  an  action  as  would  hold  these  men  liable  for  the 
mismanagement  of  these  companies ;  and  that  I  would  expect  to 
be  reimbursed  for  the  losses  I  sustained  by  their  Idiotic  misman- 
agement, and  for  their  manipulation  of  the  funds  of  these  cor- 
porations in  stock-market  operations. 

"Mr.  Breed  took  a  memorandum  of  all  the  shares  I  owned, 
what  prices  I  told  him  they  cost  me,  and  was  very  much  dis- 
turbed about  the  whole  matter.  He  had  been  the  lawyer  for  the 
Chase  Bank  in  many  other  transactions,  and  he,  it  is  fair  to 
assume,  apprised  them  of  my  belligerent  attitude.  A  few  days 
thereafter  the  collateral  was  sold  at  public  auction.  There  was 
no  bidder,  other  than  a  company  in  which  I  am  interested,  which 
bid  $150,000  for  the  108,000  shares  of  stock  and  $300,000  for 
the  half  interest  of  the  Grandeur  Company,  the  total  being 
$450,000,  which  amount  we  credited  on  the  $2,300,000  due  on  the 
note,  less  the  cost  of  conducting  the  sale. 

"The  reply  to  all  that  I  had  said  to  Breed  was  to  come  to 
the  auction  room  with  a  process-server,  accompanying  one  of  the 
lawyers  from  the  office  of  Hughes,  Schurman  &  Dwight,  and 
serve  me  with  a  summons  iiT  a  suit  that  is  brought  by  the  Fox 
Theatres  against  William  Fox.  Two  days  thereafter  they  per- 
mitted the  company  to  consent  to  a  receiver  being  appointed.  It 
will  now  be  the  duty  of  the  receivers  to  continue  this  action. 

"About  a  week  thereafter  I  received  a  most  cordial  letter  from 
Sidney  R.  Kent,  president  of  Fox  Film  Corporation,  asking  me 
to  arrange  for  a  meeting,  and  as  a  result  of  this  Mr.  Reass  and 
I  went  to  the  office  of  the  Fox  Corporation.  Ned  Tinker  re- 
ceived me;  he  is  now,  you  will  recall,  Chairman  of  the  Board 

25 


356     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

of  Fox  Film.  He  discussed  a  wholly  unimportant  matter  at  first, 
and  we  then  withdrew  into  the  adjoining  room,  where  there  were 
half  a  dozen  or  more  men,  all  ex-employes  of  William  Fox,  all 
now  lined  up  against  him ;  men  to  whom  I  had  given  their  posts 
and  their  bread  and  butter  for  years,  and  who  were  now  sitting 
in  this  room  for  the  purpose  of  cross-examining  William  Fox. 
They  asked  several  questions  which  I  hardly  understood,  and  then 
requested  that  I  sign  a  letter.  This  was  the  important  corpora- 
tion business  that  my  dear  friend  Sidney  Kent  had  referred  to  in 
his  letter.  Finally  I  said:  'If  you  will  give  me  the  papers,  so 
that  I  can  take  them  home  and  become  familiar  with  the  subject 
matter,  then  if  I  deem  it  advisable  to  give  yott  any  signed  letter 
I  will  do  so,  but  at 'this  time  I  am  unwilling  to  sign  any  letter 
unless  I  know  what  it  is  all  about/ 

"One  of  the  gentlemen  then  said,  'Excuse  me,  just  a  minute/ 
and  stepped  out  of  the  room  and  came  back  with  another  sum- 
mons— this  time  the  Fox  Film  Corporation  versus  William  Fox. 
Also  they  sent  me  a  letter  telling  me  that  I  have  been  dismissed, 
and  I  am  no  longer  to  receive  the  payment  of  $500,000  a  year. 
The  conspiracy  is  beginning  all  over  again.  The  story  that  I 
thought  was  closed  is  being  reopened/' 

It  is  interesting  to  note  that  one  of  the  things  they  ask  for 
in  their  suits  is  the  turning  over  of  Grandeur  and  Tri-Ergon  to 
them..  They  are  not  satisfied  to  have  the  free  use  of  the  patents ; 
they  want  the  whole  thing.  Says  W.  F.,  answering  my  question : 

"You  are  right;  they  deny  that  I  had  any  right  to  carry  on 
a  private  business  while  I  was  president  of  the  Fox  Film  Cor- 
poration, even  though  this  private  business  was  being  carried  on 
during  a  period  when  I  was  not  receiving  any  salary  from  either 
of  these  two  companies ;  even  though  I  was  devoting  my  time  to 
these  companies  and  was  receiving  no  compensation ;  even  though 
both  of  the  enterprises  were  highly  speculative  and  were  entirely 
out  of  the  scope  of  the  Theatres  Company  and  the  Film  Company, 
and  even  though  when  completed,  and  after  I  had  spent  a  huge 
fortune  in  the  development  of  these  two  enterprises,  I  consented 
to  give  to  the  two  companies  a  free  license  under  both  of  these 
patents,  so  that  the  Film  Company  and  the  Theatres  Company 
were  to  receive  great  benefits  without  a  single  dollar  of  invest- 
ment and  without  a  single  dollar  of  risk." 


AFTERMATH  357 

Another  curious  affair  develops  while  I  am  completing  this 
work.  To  make  it  clear,  I  have  to  take  you  back  over  the  story, 
and  follow  through  another  thread  in  the  many  colored  pattern. 

You  recall  W.  F.'s  automobile  accident  in  July,  1929.  Three 
or  four  weeks  after  that  accident  he  received  a  visit  at  his  home 
from  Harry  Stuart,  and  afterwards  there  developed  a  sharp  dif- 
ference in  the  recollections  of  these  two  as  to  what  happened  at 
that  conference.  Six  months  later  we  find  Stuart  asserting  in 
an  affidavit,  and  also  in  a  pamphlet  distributed  to  the  Fox  stock- 
holders, that  at  this  interview  and  in  subsequent  ones  be  offered 
to  take  up  the  refinancing  of  the  Fox  obligations,  but  was  refused 
consent  to  have  the  customary  examination  of  the  Fox  books  by 
certified  accountants.  W.  F.,  on  the  other  hand,  denies  emphati- 
cally that  any  such  request  was  ma$e,  or  that  he  ever  at  any 
time  gave  such  a  refusal.  He  declares  that  Stuart's  visit  was  a 
social  ooe,  and  that  the  principal  subject  of  conversation  was 
the  securities  company  or  investment  trust  which  he  was  urging 
Halsey,  St&art  &  Company  to  create.  He  denies  that  there  was 
any  quarrel  or  dispute  whatever,  but  that  on  the  contrary  he  and 
Stuart  parted  the  best  of  friends,  and  continued  in  such  relation- 
ship until  after  the  panic  at  the  end  of  October. 

In  support  of  this  contention,  W.  F.  places  in  my  hands  the 
original  of  a  letter  received  from  E.  W.  Niver,  manager  of  the 
New  York  office  of  Halsey,  Stuart  &  Company.  This  letter  bears 
the  date  of  October  17,  1929,  and  is  marked  "Confidential."  In 
it  Niver  informs  W.  F.  that  a  letter  of  great  importance  is  on 
the  way  from  Chicago,  and  that  Niver  wishes  to  make  sure  he 
receive®  it  promptly.  He  tells  W.  F.  of  a  new  investment  trust 
formed  by  Halsey,  Stuart  &  Company  and  the  Insulls. 

''Letters  will  be  sent  out  tonight  from  Chicago  to  a  few  of 
our  very  good  friend.s  including  yourself,  inviting  participation 
in  a  stock  offering.  There  will  be  no  public  offering  of  the  units 
described  in  the  enclosure." 

The  concern  is  known  as  "The  Corporation  Securities  Com- 
pany of  Chicago."  The  chairman  is  Samuel  Insull  and  the  presi- 
dent Harry  Stuart;  the  vice-presidents  are  Martin  J.  Insull, 
Samuel  Insull,  jr.,  and  Charles  Stuart.  There  are  to  be  2,700,000 
shares  outstanding,  and  of  these  Halsey,  Stuart  and  the  Insulls 
are  to  take  2,000,000,  and  put  them  into  a  voting  trust  controlled 


358     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

by  Samuel  Instill,  his  son,  and  Harry  Stuart.  The  "very  good 
friends"  of  Halsey,  Stuart  are  to  have  an  opportunity  to  buy 
700,000  shares  of  preferred  stock  and  to  get  700,000  shares  of 
common  stock  as  a  bonus,  the  subscription  price  being  $75  a 
share. 

You  will  see,  therefore,  that  the  "very  good  friends"  of 
Halsey,  Stuart  &  Company  contributed  the  sum  of  $52,500,000, 
and  to  this  large  sum  the  Insulls  and  the  Stuarts  added  $30,000,- 
000  worth  of  their  inflated  securities.  The  procedure  was  to  issue 
to  themselves  2,000,000  shares  of  the  common  stock  at  $15  per 
share ;  in  addition,  on  chance  that  the  venture  might  be  successful 
for  a  while,  they  reserved  to  themselves  an  option  to  purchase 
another  500,000  shares  of  common  stock  at  $25  per  share.  With 
the  $82,500,000  in  hand  at  the  outset,  this  new  concern  purchased 
the  securities  of  the  Insull  companies  and  put  them  away  in  its 
vaults,  and  never  told  any  more  about  the  matter  than  was  abso- 
lutely necessary.  Says  the  letter:  "The  corporation  will  not  pub- 
lish any  lists  of  its  holdings  except  as  may  be  required  by  any 
stock  exchange  upon  which  its  shares  of  stock  may  be  listed." 
That  was  the  way  they  did  business  back  in  the  good  old  days  of 
October,  1929. 

I  am  giving  these  details,  not  merely  to  show  that  on  October 
17,  1929,  W.  F.  was  listed  among  "one  of  the  few"  of  Halsey, 
Stuart's  "very  good  friends";  but  also  because  of  the  dramatic 
outcome  of  this  huge  financial  venture.  The  Insull  companies  all 
drifted  onto  the  rocks,  and  it  was  discovered  that  their  network 
of  securities  had  lost  their  value.  In  June  of  1932  we  find  the 
Corporation  Securities  Company  appearing  in  court  before  a 
Federal  judge  in  Chicago,  along  with  another  concern,  the  Insull 
Utility  Investment  Company.  These  two  owe  large  sums  to  the' 
New  York  banks,  and  the  banks  are  holding  as  collateral  stocks 
which  are  now  worth  $10,000,000.  The  bankers  come  into  court 
demanding  their  legal  right  to  sell  these  securities  at  auction  and 
get  their  money;  but  Judge  Walter  C.  Ljndley  is  pleading  with 
them  not  to  do  it,  because  at  the  present  prices  of  the  securities, 
investors  in  the  companies  would  lose  everything  they  have 
through  the  sale.  The  judge  had  issued  an  injunction,  restrain- 
ing the  banks  from  selling  the  securities,  and  their  lawyers  argue 
that  this  is  the  fourth  time  the  banks  have  postponed  a  sale,  and 


AFTERMATH  359 

they  stand  to  lose  heavily  if  the  securities  decline  further.  The 
judge  states  as  follows : 

"I  do  not  imply  there  is  a  *  Shy  lock'  in  this  case,  but  it  does 
appear  to  me  that  this  is  a  matter  of  greater  importance  to  the 
public  than  to  the  bankers.  .  .  .We  must  not  rock  the  boat  in 
such  trying  economic  times  as  these.  Let's  mark  time  a  while 
and  see  what's  going  to  happen/' 

There  is  something  strangely  familiar  in  this  situation;  you 
find  yourself  back  in  New  York,  listening  to  Judge  Coleman 
arguing  with  Morton  G.  Bogue,  attorney  for  Halsey,  Stuart  & 
Company,  who  is  trying  to  have  Fox  Film  and  Fox  Theatres 
thrown  into  receivership.  Just  as  Judge  Coleman  was  trying  to 
protect  the  stockholders  and  the  general  public,  so  now  Judge 
Lindley  is  doing ;  and  the  bankers  who  are  making  the  demand 
are  the  very  same  New  York  bankers.  There  is  only  one  dif- 
ference in  the  situation;  the  whirligig  of  time  has  brought  its 
revenges,  and  Halsey,  Stuart  &  Company  are  now  on  the  other 
side  of  the  fence.  Halsey,  Stuart  &  Company  are  pleading  for 
mercy — and,  needless  to  say,  they  are  not  presenting  any  affidavits 
alleging  prejudice  on  the  part  of  Judge  Lindley!  Says  W.  F. : 

"I  wonder  whether  Harry  L.  Stuart  now  remembers  his 
activities  in  removing  Judge  Coleman,  who  had  tried  his  best  to 
keep  my  companies  intact ;  whether  he  is  able  to  lay  his  head  on 
the  pillow  at  night  and  shut  his  eyes  in  calm  sleep,  or  whether 
he  sees  before  him  a  devil,  dancing  on  his  bed  with  a  lunging 
pitchfork,  laughing  and  jeering  at  him,  as  he  laughed  and  jeered 
at  William  Fox  and  Judge  Coleman." 

You  recall  how  Colonel  Hartfield  told  W.  F.  of  Harry  Stuart's 
advice  that  W.  F.  should  go  abroad  for  at  least  six  months, 
because  he  would  not  be  able  to  stand  the  humiliations  which  the 
Stuart-Otterson  trusteeship  was  going  to  inflict  upon  him.  What 
an  odd  turn  of  events — it  is  Samuel  Insull,  the  greatest  of  all 
utility  magnates,  who  has  gone  abroad!  And  Harold  Leonard 
Stuart,  he  of  the  carnation  in  his  button-hole,  has  had  the  humili- 
ation of  being  indicted  by  a  Federal  grand  jury  in  Wisconsin, 
for  using  the  mails  to  defraud.  It  has  to  do  with  his  circulars 
offering  the  Wardman  securities — those  companies  in  Washing- 
ton, D.  C,  concerning  which  we  heard  the  indignant  speech  of 
Senator  Elaine. 


EPILOGUE 


DURING  the  time  that  W.  F.  was  telling  me  thJb  story,  I 
carefully  avoided  all  questions  as  to  what  it  meant  to  him, 
and  what  he  thought  ought  to  be  done  about  it.  I  did  not  want 
to  interrupt  the  narrative  with  arguments  about  politics  and  eco- 
nomics; especially  I  did  not  want  to  worry  him  by  thrusting; 
forward  my  own  views.  But  after  he  had  told  the  last  fact,* 
I  started  to  ask  about  his  ideas,  so  as  to  get  a  complete  picture 
of  his  mind. 

Our  first  topic  was  Herbert  Hoover,  who  was  so  very  cordial 
and  friendly  to  W.  F.  Says  he : 

"I  am  an  admirer  of  Hoover.  I  would  cheerfully  contribute 
for  his  re-election.  He  proved  himself  a  sympathetic  person 
during  my  trials  and  tribulations.  I  often  wondered,  cduld  he 
have  done  more  to  help  me  than  he  did.  I  have  debated  that 
in  my  mind  again  and  again.  I  have  sort  of  reached  the  con- 
clusion that  he  did  everything  that  was  in  his  power.  I  have  in 
mind  Wiggin  telling  Huston  that  he  resented  the  interference  of 
the  White  House  in  the  affairs  of  his  bank  and  securities  com- 
pany. When  I  found  myself  in  the  most  serious  part  of  my 
difficulties,  I  did  find  a  perfect  willingness  of  the  White  House 
to  give  me  every  assistance.  I  found  the  President  perfectly 
willing  to  have  Henry  Ford  call  him  on  the  telephone,  and  to  say ; 
*1  would  consider  it  a  favor  to  the  administration  if  you  would 
help  prevent  these  huge  concerns  going  into  receivership/  '* 

I  asked  if  W.  F.  admired  Hoover's  policies  as  much  as  he 
admired  Hoover's  personality,  and  the  answer  was; 

"I  would  never  criticize  Hoover's  policies,  for  BO  one  appre- 
ciated more  than  I  his  helplessness,  that  was  made  possible  by 
the  stupid  voters  of  the  United  States,  who  elected  him  President 
and  then  gave  him  a  bolshevik  Senate  and  a  bolshevik  House. 
I  am  certain  that  if  Hoover  had  had  the  power  during  these  peace 
times  that  Woodrow  Wilson  had  during  war  times,  if  he  had  had 

360 


EPILOGUE  361 

the  support  of  Congress  and  the  Senate,  we  would  have  avoided 
at  least  50  per  cent  of  our  present  difficulties.  I  think  most  of 
our  difficulties  came  through  the  fact  that  the  Chief  Executive 
of  the  United  States  had  to  express  his  thoughts  to  a  Congress 
and  Senate  who  by  no  means  had  the  trained  mind  that  he  had, 
and  therefore  didn't  understand  the  language  he  was  speaking, 
and  rather  than  help  him  do  the  things  he  wanted  done,  opposed 
them.  When  they  finally  did  pass  the  constructive  measures  that 
he  had  conceived  to  prevent  a  further  destruction  of  the  nation, 
it  was  just  a  little  bit  too  late.  The  damage  had  already  been 
done.  Many  of  the  fine  pieces  of  legislation  recently  passed  to 
prevent  a  further  depression  were  in  the  mind  of  Hoover  at  least 
two  years  or  longer  before  they  were  passed ;  but  he  was  never 
able  to  get  his  Senate  and  Congress  to  see  his  point  of  view, 
and  therefore  must  not  be  charged  with  the  responsibility." 

In  answer  to  that  I  pointed  out  very  gently  that  if  Herbert 
Hoover  had  been  anxious  to  have  some  action  to  meet  the  depres- 
sion, he  had  had  it  in  his  power  to  call  a  special  session  of 
Congress.  Instead  of  so  doing,  he  had  chosen  to  wait  from 
March  until  December,  1931,  for  the  assembling  of  the  new 
Congress.  It  had  been  perfectly  well  known  in  Washington  that 
the  thing  which  Hoover  desired  least  of  all  in  the  world  was  to 
have  that  new  Congress  on  his  hands.  On  this,  as  cua  other 
occasions,  I  was  pleased  to  observe  that  W.  F.  would  recognize 
a  fact  when  it  was  presented  to  him. 

I  asked  what  concrete  remedies  he  had  to  suggest  for  the 
evils  which  he  reveals  in  this  book.  He  answered  that  he  did 
not  feel  competent  to  make  suggestions,  but  thought  the  readers 
of  the  book  would  prefer  to  draw  their  own  conclusions.  I  urged 
the  opposite  point  of  view,  saying  that  anyone  who  had  become 
interested  in  his  story  would  wish  to  know  what  he  himself  had 
learned  from  it.  What  did  these  bitter  experiences  mean  to  him  ? 

So  W.  F.  set  forth  two  concrete  remedies:  First,  he  would, 
like  to  see  a  law  passed  abolishing  short  selling:  **a  law  that 
will  make  it  illegal  to  sell  shares  of  stock  that  the  seller  doesn't 
actually  own  and  possess.  The  question  of  short  selling  should 
not  remain  a  regulation  by  the  New  York  Stock  Exchange,  or  by 
the  executives  of  any  other  stock  exchange  throughout  the  nation, 
but  the  United  States  Senate  and  Congress  should  enact  such  a 


362     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

law  as  will  prohibit  the  selling  short  of  any  shares  of  stock  listed 
on  any  stock  exchange  in  this  country.  Any  other  remedy  that 
may  be  supplied  here  will  be  wholly  insufficient,  and  will  result 
only  in  a  whitewash  of  our  present  difficulties." 

The  second  measure  would  be  one  forbidding  national  banks 
to  have  affiliates  and  securities  companies,  for  the  doing  of  those 
things  which  under  the  law  the  national  banks  are  themselves 
forbidden  to  do.  Says  W.  F. : 

"When  I  was  but  a  young  man  and  borrowed  that  first  $1,000 
that  I  told  you  about,  I  remember  what  the  functions  of  a  banker 
were.  The  banker  of  a  brief  thirty  years  ago  felt  that  his  duty 
and  purpose  in  life  was  to  create  an  institution  where  people 
would  be  free  to  deposit  their  money,  and  he  would  create  an 
executive  staff  and  directorate  to  take  this  money,  invest  it,  and 
loan  it  in  such  a  way  as  to  be  perfectly  safe,  and  he  was  willing 
to  earn  the  difference  between  the  amount  he  paid  his  depositor 
and  the  amount  he  was  able  to  earn  from  his  borrower.  I  believe 
that  that  was  the  purpose  of  banks  throughout  the  whole  of  the 
United  States,  until  this  nation  found  itself  after  the  war,  or 
during  the  war,  in  what  they  called  a  'new  era/ 

"Bankers  then  changed,  and  had  a  different  purpose  in  life. 
They  were  not  contented  with  earning  the  normal  profits  that  a 
bank  could  earn  on  its  capital  and  surplus.  There  sprang  up  what 
I  consider  the  greatest  evil  in  the  financial  world,  and  one  of  the 
causes  of  this  great  depression,  even  more  than  short  selling.  In 
these  banks,  which  were  supervised  by  the  banking  department, 
and  whose  accounts  were  carefully  audited,  there  was  found  a 
subterfuge  that  would  permit  them  to  do  things  for  which  their 
charter  was  never  intended;  there  came  the  fashion  of  creating 
an  affiliate  to  the  bank,  called  a  securities  company.  This,  in  my 
opinion,  is  nothing  more  than  a  gambling  scheme  to  use  the 
funds  belonging  to  the  depositors  for  speculation. 

"A  bank's  function  is  carefully  limited  by  the  charter  granted 
from  either  the  State  or  Federal  Government ;  whereas  the  func- 
tion of  a  securities  company  is  limited  only  to  what  the  directors 
of  the  bank  wish  to  incorporate  in  their  certificate  of  incorpora- 
tion. Usually  that  is  so  broad  that  it  permits  a  securities  com- 
pany to  do  anything,  and  surely  all  the  things  that  were  never 
intended  when  the  charter  to  the  bank  was  granted.  One  need 


EPILOGUE  363 

not  go  farther  than  to  read  the  charter  of  the  Chase  Bank,  which 
was  issued  seventy-five  years  ago,  to  see  what  the  wise  fathers 
intended  that  bank  to  do ;  and  then  see  what  the  Chase  Securities 
Company  can  do  now !  But  I  don't  intend  this  criticism  for  the 
Chase  people  only;  a  majority  of  the  banks  of  the  United  States 
now  have  an  affiliate;  this  is  true  of  both  large  and  small  banks. 
The  honest  banker  of  thirty  years  ago  has  become  a  stock 
manipulator,  using  the  funds  of  his  bank  to  participate  in  various 
syndicates  as  they  are  offered  to  him. 

"Attached  to  the  certificate  of  stock  of  the  Chase  Bank  today 
are  your  rights  in  the  Chase  Securities  Company.  The  stock- 
holder knows  definitely  that  his  bank  is  not  only  a  bank,  but  it 
has  a  securities  company,  and  a  securities  company  has  unre- 
stricted powers.  If  that  were  not  so,  Wiggin  could  not  have 
been  the  planner  with  Clarke  to  capture  my  companies,  nor  could 
he  make  personal  gains  in  his  personal  relationships  with  Clarke. 
Do  you  suppose  Clarke  wants  Wiggin  with  him  just  because  he 
is  Wiggin?  Or  Is  it  because  he  is  chairman  of  the  board  of  the 
Chase  Bank,  and  can  manipulate  $350,000,000  belonging  to  stock- 
holders and  $1,650,000,000  belonging  to  his  depositors?  I  don't 
believe  Clarke  would  be  willing  to  be  associated  with  the  head 
of  the  Chase  Bank  or  the  head  of  any  other  bank,  who  had  only 
the  privileges  granted  to  him  by  the  charter  of  the  State  or 
Federal  Government. 

"Of  course,  the  National  City  Bank  also  has  a  large  securities 
company  and  many  affiliates.  The  thing  that  destroyed  the  Bank 
of  the  United  States  was  its  affiliates.  This  is  the  most  damnable 
practice  that  the  banking  world  of  this  country  has  ever  known, 
and  the  most  necessary  legislation  I  know  of,  by  this  Congress 
or  any  other  Congress  since  the  history  of  our  Government,  is 
a  law  compelling  the  dissolution  of  these  affiliates  and  securities 
companies.  The  surest  way  to  make  a  banker  be  a  banker  and 
have  the  respect  of  the  community  he  had  before  this  began  is 
to  stop  him  from  becoming  a  speculator.  We  now  find  the  Chase 
Bank  not  only  running  the  Fox  companies,  but  the  American 
Woolen  Company.  Prior  to  the  control  of  the  American  Woolen 
Company,  and  before  the  death  of  the  president,  that  company 
was  one  of  the  most  prosperous  corporations  America  had.  Now 
look  at  it!  Since  the  Chase  Securities  Company  has  had  it  in 


364     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

hand,  I  don't  think  it  lias  made  a  dollar,  and  that  was  about  ten 
years  ago.    How  many  other  businesses  they  took,  I  don't  know. 

"It  "was  never  intended  that  a  bank  should  become  a  com- 
petitor of  industry.  A  depositor  or  borrower  from  a  bank  always 
felt  free  to  go  to  the  president  of  his  bank  and  tell  him  of  his 
tribulations,  and  of  his  prosperity.  You  don't  dare  do  that  now 
or  they  will  take  your  company  away  from  you/* 

It  appears  that  national  bank  examiners  have  not  tinder  the 
present  laws  the  right  to  examine  affiliates  of  banks.  As  regards 
New  York  State,  an  amendment  to  the  law  was  passed,  giving 
examiners  this  right;  but  our  Federal  legislators  laave  not  yet 
seen  fit  to  follow  suit,  and  that  is  one  reason  for  the  tremendous 
loss  in  bank  stocks,  and  why  banks  have  been  failing1  throughout 
the  cotrntry*  Under  the  charter  a  bank  may  only  buy  what  they 
call  "legal  securities" ;  but  a  securities  company  is  raider  no  such 
restraint  Therefore  the  banks  have  been  speculating  in  real 
estate  and  other  enterprises,  and  in  the  end  they  will  control  every 
business  in  the  nation. 

I  asked  W.  F.  what  more  fundamental  plans  1*$  might  have 
for  the  solution  of  our  problems,  and  in  reply  he  gave  me  quite 
a  discourse.  In  reading  it,  bear  in  mind  that  this  was  spoken 
before  the  fad  of  Technocracy  hit  the  country* 

"About  forty-one  years  ago,  when  I  found  my  first  job  with 
a  clothing  firm,  the  day's  work  consisted  of  eleven  hours  a  day 
for  six  days  a  week  and  a  half  day  on  Sunday.  The  total  number 
of  hours  was  seventy-one  hours  for  the  six  days  and  Sunday.  To 
the  best  of  my  recollection  that  was  considered  a  week's  work,  not 
only  in  that  line  of  business,  but  in  all  lines  of  business.  This 
was,  of  course,  prior  to  the  modern  machine  age.  It  was  neces- 
sary for  the  laboring  man  to  work  this  number  of  hours  to  make, 
build  and  grow  that  which  was  necessary  to  sustain  the  population 
of  this  country. 

"I  distinctly  remember  six  or  eight  years  after  I  found  my 
first  job,  when  the  laboring  man  complained  bitterly  at  the  num- 
ber of  hours  necessary  to  work,  and  when  conflicts  occurred 
between  capital  and  labor  to  where  the  week's  hours  were  reduced 
to  sixty.  I  distinctly  remember  capital  claiming  that  labor  was 
destroying  the  nation  by  its  attempt  to  reduce  the  number  of 
hours,  aod  that  capital  charged  labor  was  interfeifag  with  the 


EPILOGUE  365 

prosperity  of  the  nation*  After  the  new  schedule  of  hours  was 
in  effect  for  six  months  or  more,  instead  of  it  ruining  the  Country, 
it  was  discovered  to  be  of  material  help  to  the  nation. 

"I  distinctly  recall  some  years  later  when  unions  were  formed 
in  many  of  the  trades  and  industries  of  America,  which  contended 
that  the  number  of  hours  were  entirely  too  many,  and  the  hours 
were  reduced  to  fifty-four  hours  per  week.  I  remember  the  cry 
of  manufacturers  of  this  nation  that  labor  was  the  ruination  of  all 
things;  that  this  reduction  of  hours  would  tend  to  destroy  this 
country.  But  the  reverse  was  found  to  be  the  fact.  Manufac- 
turers soon  learned  that  not  only  was  it  practical  to  reduce  the 
hours  over  a  period  of  years  from  seventy-one  to  fifty-four,  or 
approximately  one-fourth  less  working  hours  per  week,  but  that 
there  was  a  constant  increase  in  the  amount  of  wages  that  could 
be  paid  per  week,  so  that  the  laboring  man  was  receiving  more  for 
fifty- four  hours  a  week  than  he  did  tinder  the  period  when  he 
was  working  seventy-one  hours  a  week. 

"So  I  recall  vividly  the  change  that  was  constantly  being  intro- 
duced. When  we  found  ourselves  at  the  beginning  of  the  war 
in  Europe,  and  we  realized  that  all  nations  were  going  to  turri 
to  America  for  supplies,  a  new  schedule  of  hours  was  put  into 
effect ;  five  days  a  week  at  eight  hours  a  day,  and  four  hours  on 
Saturday — forty-four  hours.  In  fact,  many  trades  insisted  upon 
a  five-day  week,  as  for  example  the  painters'  and  decorators*  and 
paper-hangers'  unions  in  New  York.  They  refused  to  work  more 
than  five  days  a  week,  eight  hours  a  day — forty  tours. ;  The 
general  unionized  trades,  however,  had  a  schedule  .of  forty-four 
hours. 

<flt  was  during  the  forty-four-hour  regime  that  wages  rose 
from  $4  a  day  for  a  mechanic  at  the  beginning  of  1914  to  $15  a 
day  in  1929.  It  was  during  the  shorter  hour  period  that  this 
country  enjoyed  its  greatest  prosperity.  It  is  clear  in  my  naind 
that  the  proper  method  to  be  employed  by  this  Republican  Gov- 
ernment is  a  system  whereby  each  year  a  careful  survey  should 
be  made  of  the  new  modern  machinery  that  has  been  inaugurated 
during  the  previous  year,  and  then  discover  what  is  the  number  of 
hours  that  the  40,000,000  people  who  work  for  wages  in  America 
should  work  so  as  to  supply  all  that  the  nation  requires — not  to 
overproduce  and  not  to  underproduce.  It  is  underproduction  that 


366     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

creates  false  values,   and  it   is   overproduction  that  brings  on 
depressions. 

"In  my  opinion,  this  depression  is  not  only  caused  by  bear 
raiding  and  reckless  spending  of  money  by  the  states  and  munici- 
palities of  this  nation,  or  by  the  manipulation  of  bankers,  but 
is  mainly  caused  by  a  condition  brought  about  during  the  World 
War.  America,  entering  the  war  some  time  in  1917,  shortly 
thereafter  had  an  army  of  4,000,000  men.  These  4,000,000  men 
were  the  flower  of  the  youth  of  the  country,  and  they  were  now 
to  devote  their  time  not  to  build,  but  to  destroy.  I  am  told  that 
not  only  did  we  have  4,000,000  men  in  the  army,  but  that  it 
required  4,000,000  more  men  who  remained  home  to  manufacture 
that  which  the  4,000,000  in  the  army  were  wearing,  eating  and 
destroying;  so  that  some  time  in  1917,  8,000,000  of  the  most  able 
men  this  nation  had  were  devoting  themselves  not  to  upbuilding, 
but  to  the  destruction  of  other  nations  and  people. 

"Men  of  ability  and  brain,  realizing  that  8,000,000  men  had 
been  removed,  devoted  their  energy  and  time  to  inventing  new 
machinery;  so  that  when  the  war  came  to  an  end,  there  were 
8,000,000  men  that  this  nation  very  pleasantly  got  along  without, 
and  were  it  not  for  the  fact  that  from  the  beginning  of  the 
World  War  in  1914  until  long  after  the  armistice  was  signed, 
there  had  been  no  program  of  building  in  these  United  States — 
were  it  not  for  that  fact,  we  would  have  been  in  the  depression 
immediately  after  the  war.  But  there  was  accumulated  between 
1914  and  1919  five  years  of  the  usual  annual  building  program 
that  is  customary  in  a  country  as  big  and  as  rich  as  this. 

"I  distinctly  remember  that  as  late  as  1920  there  existed  in 
this  nation  a  housing  shortage,  so  that  it  was  impractical  for 
young  folks  to  marry,  because  there  was  no  place  where  they 
could  live.  I  remember  Samuel  Untermyer  appearing  before  the 
Legislature  of  New  York  some  time  during  the  year  of  1920  and 
asking  the  Legislature  to  pass  a  law  to  compel  the  life  insurance 
companies  to  loan  $100,000,000  with  which  to  build  homes  so 
that  the  housing  shortage  could  be  relieved.  Not  only  did  this 
condition  exist  in  New  York,  but  it  existed  in  every  city  in  the 
United  States. 

"Therefore,  it  can  readily  be  seen  that  these  8,000,000  men 
who  came  back  found  employment  at  increased  wages  only  be- 


EPILOGUE  367 

cause  of  this  terrific  shortage  that  existed,  due  to  the  neglect 
during  the  war.  Perhaps  in  about  1927  all  of  the  shortage  had 
been  overcome.  We  were  in  a  momentum  of  building,  however, 
and  recklessly  continued  it  until  the  summer  of  1929.  The  over- 
production that  then  occurred  emphasized  and  is  now  emphasiz- 
ing the  depression  that  we  are  going  through. 

"I  am  informed  that  there  are  40,000,000  wage-earners  in 
America.  The  present  number  of  hours  now  commonly  given 
to  labor  are  eight  hours  a  day  for  five  days,  and  four  hours  on 
Saturday — forty-four  hours  a  week.  If  it  is  correct  that  we  have 
40,000,000  wage-earners,  and  if  the  report  is  correct  that  there 
are  8,000,000  unemployed  in  America,  then  it  becomes  a  pure 
mathematical  problem  how  to  overcome  this  depression.  If  there 
still  is  employment  for  32,000,000  people  at  forty-four  hours  a 
week,  the  mathematical  problem  shows  that  we  have  each  week 
1,408,000,000  working  hours ;  the  32,000,000  people  still  employed, 
working  forty-fours  hours  a  week,  work  1,408,000,000  hours. 
Knowing  that  1,408,000,000  hours  are  sufficient  to  make  that 
which  the  nation  requires,  all  that  is  necessary  is  to  divide 
1,408,000,000  by  40,000,000  wage-earners. 

"If  that  is  done,  you  will  discover  that  thirty-five  hours  per 
week  is  sufficient — that  with  thirty-five  hours  a  week  40,000,000 
people  could  be  employed  to  do  that  which  32,000,000  people  are 
doing  now;  and  if  my  theory  is  correct,  the  number  of  hours 
that  labor  should  be  employed  is  the  number  of  hours  that  it  takes 
to  give  every  soul  in  America  peace  and  comfort  and  to  supply 
him  with  everything  he  requires — which,  of  course,  should  be  the 
system  of  this  great  Republic.  Then  the  solution  of  our  depres- 
sion is  a  simple  one,  and  is  not  one  for  union  organizations  to 
solve;  let  our  Federal  Government  investigate  and  prove  these 
figures,  and  if  the  same  conclusion  is  reached  by  them,  let  Con- 
gress enact  a  la\y  that  the  legal  week's  labor  shall  be  reduced  to 
thirty-five  hours  and  no  more,  and  within  a  week  after  that  bill  is 
passed  and  signed  by  the  President,  our  depression  is  at  an  end. 

"The  strangest  thing  about  all  this  is  the  fact  that  as  the 
number  of  hours  decreased  from  the  time  I  got  my  first  job, 
the  wages  increased,  and  the  highest  wage  known  in  the  history 
of  America  occurred  in  the  years  of  1927,  1928  and  1929,  and 
the  lowest  number  of  hours  that  labor  ever  worked  in  the  history 


368     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

of  America  occurred  during  those  same  years.  It  was  during 
those  years  and  for  the  first  time  that  the  United  States  Steel 
Corporation  was  able  to  make  up  its  mind  that  six  days  consti- 
tuted a  week;  and  that  Sunday  was  the  Lord's  day  and  a  day 
of  rest;  it  was  during  that  time  that  the  Steel  Corporation 
changed  its  method  of  hours — made  a  man's  work  from  seven 
days  a  week  to  six  days  a  week,  the  thing  it  was  afraid  to  do 
during  the  previous  twenty-five  years  of  its  existence.  Not  only 
did  it  reduce  their  hours,  but  raised  the  wage,  and  the  strangest 
thing  of  all  is  that  during  this  period  it  made  the  largest  profit  in 
the  history  of  its  career,  other  than  one  of  the  war  years. 

"Of  course,  it  becomes  clear  that  if  the  American  wage-earner 
is  put  on  a  basis  where  he  is  to  spend  a  life  of  ease  and  luxury, 
as  a  reward  for  his  labor  during  the  hours  that  he  works,  he 
will  have  been  raised  above  the  laboring  man  of  any  other  nation 
in  the  world,  and  he  must  be  protected  against  the  laboring  man 
of  other  nations  of  the  world  which  are  unwilling  to  recognize 
the  rights  of  labor  as  we  are  willing,  and  should.  We  will  have 
to  build  a  tariff  wall  so  high  and  so  wide  as  to  shut  out  every- 
thing that  is  made  in  any  other  part  of  the  world,  until  such 
time  as  their  hours  of  labor  are  put  on  a  par  with  ours,  and  until 
such  time  as  their  wages  are  similar  to  ours, 

"AH  this  is  not  new  with  me  today.  I  have  been  talking  this, 
and  have  had  plenty  of  time  to  talk  it,  being  out  of  business  for 
the  last  two  years,  with  everyone  who  would  listen  to  me.  On 
my  last  visit  with  President  Hoover,  in  talking  about  the  depres- 
sion, he  informed  me  that  the  Commerce  Department  had  pre- 
pared figures  showing  that  93  per  cent  of  all  things  we  produce 
in  this  country  is  consumed  here,  and  that  only  7  per  cent  of. 
what  we  produce  in  this  country  has  been  shipped  abroad.  It 
seemed  to  him  a  perfectly  simple  matter  to  slow  down  our  ener- 
gies to  where,  instead  of  producing  100  per  cent,  we  should 
produce  93  per  cent,  the  amount  consumed  here  in  this  country. 
Slowing  down  can  only  come  by  the  reduction  of  the  working 
hours  per  week.  You  can't  slow  down  by  telling  one  manufac- 
turer to  make  less,  for  no  matter  what  you  tell  him,  he  will  not 
make  less.  You  can  only  do  it  by  having  a  Federal  law,  setting 
the  maximum  number  of  laboring  hours  the  man  can  work,  and 
that  maximum  is  a  purely  mathematical  problem,  with  the  facts 


EPILOGUE  369 

as  they  are  udw  known  by  our  Government.  What  a  beautiful 
country  thi$  will  be  to  live  in,  when  by  Federal  laws  we  find  that 
the  wage-earners'  week  will  consist  of  working  Monday  and  Tues- 
day, spending  Wednesday  with  his  family,  working  Thursday  and 
Friday,  and  spending  Saturday  and  Sunday  with  his  family!  If 
that  is  sufficient  to  produce  all  that  we  require,  why  work  any 
more  than  that,  and  why  not  give  the  wage-earner  this  heaven 
on  earth? 

"My  recital  shows  that  the  shorter  the  hours,  the  higher  the 
wage  and  the  greater  the  profits  to  the  corporate  interests.  Simul- 
taneously with  the  shorter  hours,  the  article  that  the  wage-earner 
buys  must  sell  at  a  higher  price.  Let  us  say  he  is  a  shoemaker 
— we  redt^oe  his  working  hours,  but  permit  him  to  earn  as  much 
as  he  has  previously  earned.  As  soon  as  that  is  don?e^  the  shoes 
previously  costing  $4  are  $5.  There  is  no  harm  in  that,  because 
all  the  wage^earner  expects  as  a  result  of  the  labor  he  performs 
is  to  have  a  fine  place  to  live  in,  with  the  modern  conveniences 
that  we  have  in  this  nation ;  to  be  well  clothed,  and  have  a  dollar 
put  away  for  a  rainy  day,  and  an  education  for  his  children. 
Once  he  has  that,  he  feels  he  is  in  heaven.  I  say  that  of  sheer 
necessity  the  price  will  be  increased.  The  correct  method  is  this? 
as  I  see  it  It  is  right  and  necessary  that  if  I  am  only  going 
to  work  four  days  a  week,  and  I  am  a  shoemaker,  that  you,  a 
tailor,  will  have  to  pay  for  the  shoes  I  make  a  sum  of  money 
that  will  enable  me  to  have  the  other  three  days  of  rest/' 

W.  F.  expressed  the  idea  that  I  would  "not  be  opposed  to  all 
of  this/*  and  he  was  correct.  My  only  objection  to  it  is  that  it 
cannot  be  carried  out  under  the  profit  system  of  industry*  When 
you  reduce  the  hours  of  labor  without  altering  wages,  you  are 
really  increasing  the  wage  per  hour;  and  there  are  very  sharp 
limits  to  the  increasing  of  wages  under  the  profit  system.  It  can 
only  be  done  in  times  of  expansion  and  rising  prices.  The  reason* 
we  all  had  high  wages  from  1927  to  1929  was  because  we  were 
accepting  one  another's  paper  promises ;  we  were  living  by  taking 
in  one  another's  washing.  But  now  the  water  has  been  squeezed 
out  of  that  washing. 

Our  friend  W.  F.  sees  that  he  cannot  reduce  the  number  of 
working  hours  and  pay  the  same  wages  without  bankrupting  the 
manufactoer;  so  he  proposes  to  let  the  manufacturer  raise  the 


370     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

price  of  the  product.  But  our  friend  neglects  to  follow  that 
process  through  and  ask  what  will  be  the  effect  of  this  upon  the 
consumer.  As  it  happens,  the  consumer  and  the  workingman  are 
the  same  person.  When  you  raise  a  shoemaker's  wage  per  hour, 
and  at  the  same  time  raise  the  price  of  shoes,  and  continue  that 
process  all  the  way  down  the  line,  you  have  not  really  changed 
anybody's  income :  you  have  merely  changed  the  terms  in  which 
it  is  expressed.  Men  say  that  they  are  getting  $5  a  day  instead 
of  $4,  and  at  the  same  time  they  pay  $5  for  their  purchases  instead 
of  $4.  As  the  economists  phrase  it,  nominal  wages  have  been 
increased  but  real  wages  have  remained  untouched,  and  the  pur- 
chasing power  of  the  community  has  not  been  altered.  So  W.  F.'s 
idea  that  "within  a  week  after  that  bill  is  passed  and  signed 
by  the  President,  our  depression  is  at  an  end" — -this  is  merely 
one  more  dream  of  "prosperity  just  around  the  corner." 

I  explained  to  W.  F.  my  own  view,  that  this  depression  is 
due  to  the  automatic  process  whereby  great  wealth  has  become 
concentrated  in  few  hands,  so  that  the  masses  of  the  people  no 
longer  have  sufficient  purchasing  power  to  furnish  profits  on  the 
swollen  capital.  Nearly  thirty  years  ago,  I  wrote  an  open  letter 
to  Lincoln  Steffens,  pointing  out  how  our  mass  of  invested  capital 
was  increasing  at  compound  interest,  and  saying  that  there  must 
come  a  time  when  the  amount  had  become  too  great  for  the  con- 
suming public  to  furnish  profits  upon.  In  other  words,  capitalism 
was  a  self-eliminating  phenomenon ;  the  game  of  making  profits 
must  end  with  a  crash  when  somebody  or  some  group  of  bodies 
had  won  all  the  chips. 

W.  F.  said  he  didn't  understand  that  theory,  and  thought  that 
the  facts  disproved  it.  He  pointed  out,  for  example,  how  the 
United  States  Steel  Corporation  had  started  out  with  $500,000,000 
worth  of  bonds,  and  then,  "instead  of  adding  to  those  bonds,  as 
you  picture  the  capital  structure  growing  at  compound  interest, 
the  facts  are  that  $350,000,000  worth  of  these  bonds  are  actually 
retired.  They  have  done  exactly  the  opposite  of  what  you  think 
happens  in  the  industrial  world.  This  makes  it  unnecessary  to 
pay  dividends,  and  they  have  passed  the  dividend,  so  that  the 
common  stock  gets  no  dividend  at  all  now.  Three  hundred  and 
fifty  million  dollars'  worth  of  bonds  only  retired  a  couple  of  years 
ago,  and  the  total  value  of  8,000,000  shares  of  common  stock  on 


EPILOGUE  371 

which  they  have  passed  the  dividend  is  $200,000,000,  and  it  is  a 
substitute  for  the  retirement  of  $350,000,000  worth  of  bonds,  on 
which  there  was  an  obligation  to  pay  interest." 

That  picture  is  a  tribute  to  the  caution  and  good  judgment  of 
those  who  managed  U.  S.  Steel,  but  it  does  not  counter  my  argu- 
ment. In  1929  the  'capitalization  of  U.  S.  Steel  had  swollen  to 
over  $2,000,000,000,  and  all  that  was  demanding  and  receiving  its 
toll  from  the  consuming  public ;  the  paying  of  that  toll  was  called 
"prosperity."  But  the  time  came  when  the  public  hadn't  the 
money  to  buy  all  the  product,  and  so  the  toll  couldn't  be  paid. 
Now  the  steel  mills  are  working  at  only  16  per  cent  of  their 
capacity,  and  there  are  no  dividends,  and  that  is  "hard  times." 
Other  concerns,  which  were  less  careful  to  change  their  bonds 
into  stocks,  are  in  the  hands  of  receivers — and  all  for  the  same 
reason,  because  the  capitalization  had  swollen  beyond  the  point 
where  the  consumers  could  furnish  the  needed  profits  to  pay  the 
dividends  and  interest.  Under  our  system,  when  there  are  no 
profits,  there  can  be  no  production. 

I  have  saved  until  the  end  the  topic  which  I  think  lies  nearest 
to  the  heart  of  W.  F.,  and  that  is  his  Tri-Ergon  patents  and  the 
use  he  is  going  to  make  of  them.  I  told  you  how  the  "fly- wheel" 
patent,  essential  to  all  sound  reproducing  machines,  had  been 
granted  by  the  United  States  Patent  Office.  I  have  before  me 
a  copy  of  the  complaint  which  was  filed  November  19,  1931,  in 
the  Federal  Court,  District  of  Delaware,  United  States  Letters 
Patent  No.  1713726;  the  American  Tri-Ergon  Company  against 
Electrical  Research  Products,  Inc. — our  old  friend  Otterson,  none 
other!  How  pleasant  it  will  seem  to  the  Fox  when,  after  the 
due  and  necessary  delays  of  the  law,  his  petition  is  granted,  that 
"the  defendant,  Electrical  Research  Products,  Inc.,  its  officers, 
directors,  servants,  agents,  and  all  persons,  firms  and  corpora- 
tions associated  with  it  or  acting  in  its  behalf,  be  perpetually 
enjoined  and  restrained  by  the  decree  of  this  court  from  directly 
or  indirectly  manufacturing  or  causing  to  be  manufactured,  using, 
directing  the  use  of,  or  causing  to  be  used,  selling  or  causing  to 
be  sold,  leasing  or  causing  to  be  leased,  all  apparatus  and/or 
methods  embodying  or  employing  the  invention  of  said  Letters 
Patent,  and  from  infringing  upon  or  contributing  to  the  infringe- 
ment of  said  Letters  Patent  in  any  manner  whatsoever." 

26 


372     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

And  even  pleasanter  when  the  court  assents  "that  the  defend- 
ant may  be  decreed  to  account  for  and  pay  over  to  plaintiffs 
all  such  gains,  profits,  and  advantages  as  have  accrued  to  or  have 
been  earned  or  received  by  said  defendant,  and  all  such  gains, 
profits  and  advantages  as  would  have  accrued  to  or  been  earned 
by  the  plaintiffs  or  either  of  them  but  for  the  said  infringement 
of  said  defendant,  and  also  all  damages  the  plaintiffs,  or  either 
of  them,  have  sustained  by  said  infringement." 

This  same  suit  is  being  brought  against  a  number  of  other 
concerns  which  are  in  the  talking  picture  business;  but  W.  F. 
would  be  more  than  human  if  he  did  not  take  especial  interest 
in  the  suit  against  the  Telephone  Company  and  its  subsidiaries, 
which  tried  so  hard  to  get  these  patents  away  from  him,  and  led 
the  fight  to  ruin  him.  In  due  course  the  Patent  Office  will  be 
compelled  to  grant  his  claims  to  the  photoelectric  cell  process, 
essential  to  all  sound  recording.  I  have  told  of  the  favorable 
decision  of  the  Supreme  Court  of  the  District  of  Columbia,  as 
sweeping  as  words  can  make  it.  When  that  patent  is  granted, 
and  the  suits  won,  Messrs.  Otterson,  Bloom,  and  Gifford  will 
come  to  W.  F.  to  ask  for  a  license  to  remain  in  the  business  of 
manufacturing  sound  recording  and  sound  reproducing  apparatus. 
W.  F.  has  promised  me  that  I  may  have  the  pleasure  of  being 
present  at  that  conference.  I  have  promised  that  I  will  be 
present,  even  though  I  have  to  come  half  way  around  the  world ! 

He  is  still  cherishing  that  dream  of  making  educational  pic- 
,  tures  for  schools,  colleges,  churches,  and  homes.  In  fact,  he  has 
already  got  the  reproducing  apparatus  ready.  He  hopes  to  keep 
the  price  down  by  mass  production,  and  to  have  a  system  of 
film  rentals  like  a  circulating  library.  He  gives  me  a  series  of 
figures  showing  how  many  homes  there  are  in  America,  and  how 
many  classrooms  in  American  schools,  and  how  many  churches 
and  synagogues  and  hospitals  and  other  places  where  people 
would  look  at  educational  talking  pictures.  The  figures  are 
astronomical ;  but  we  Americans,  who  have  seen  the  growth  of 
radio  in  ten  years,  and  of  the  "talkies"  in  five,  should  not  find 
them  incredible.  I  quote  his  statement: 

"In  1927,  when  I  first  began  negotiating  with  the  Telephone 
Company  concerning  my  Tri-Ergon  patents,  I  drew  for  them  this 
picture.  First  I  contended  that  within  five  years  every  motion 


EPILOGUE  373 

picture  theatre  in  America  would  change  from  silent  to  talking 
motion  pictures.  There  were  20,000  motion  picture  theatres  in 
America;  these  20,000  motion  picture  theatres  would  require 
equipment,  and  at  this  time  the  average  cost  to  the  theatre  was 
a  little  over  $20,000,  so  that  the  contract  to  equip  the  motion 
picture  theatres  of  America  would  be  20,000  times  $20,000.  In 
the  remainder  of  the  world  there  were  at  least  another  20,000 
motion  picture  theatres,  so  in  the  theatre  field  alone  there  would 
be  approximately  $800,000,000  worth  of  equipment  necessary. 

"There  were  250,000  churches  in  America,  and  at  least  that 
number  in  the  balance  of  the  world,  and  it  was  my  opinion  that 
when  a  cheaper  equipment  had  been  developed,  and  the  equip- 
ment price  could  be  brought  down  to  approximately  $5,000,  there 
was  an  opportunity  of  equipping  these  500,000  churches.  The 
value  of  the  equipment  would  be  $2,500,000,000. 

"There  are  1,000,000  classrooms  in  America,  and  I  argued 
that  each  of  these  classrooms  would  ultimately  be  equipped  with 
talking  motion  picture  reproducing  units,  and  that  a  moderately 
priced  equipment  could  be  sold.  I  estimated  a  school  equipment 
should  be  produced  costing  no  more  than  $2,500  per  equipment, 
making  a  total  of  $2,500,000,000.  I  went  on  to  say  that  when 
American  schools  were  fully  equipped,  perhaps  a  similar  possibil- 
ity could  be  developed  in  the  remainder  of  the  world. 

"There  are  15,000,000  radio  sets  in  the  homes  of  the  people 
of  America,  and  I  argued  that  each  home  that  had  a  radio  was 
a  prospective  customer  for  home  talking  motion  pictures.  If  an 
equipment  could  be  developed  at  a  cost  of  no  more  than  $1,000  per 
equipment,  there  was  a  possibility  of  selling  15,000,000  of  these 
equipments,  a  total  of  $15,000,000,000. 

"In  the  latter  figure  the  Telephone  Company,  of  course,  had 
no  interest,  because  in  an  agreement  made  between  the  Telephone 
Company  and  the  Radio  Company,  the  former  gave  up  all  its 
rights  to  selling  equipment  to  the  home ;  this  field  was  left  entirely 
to  the  Radio  Company.  Since  I  sold  my  shares  to  Harley  Clarke 
I  have  discussed  the  possibilities  of  the  development  of  the  home 
field  with  David  Sarnoff  of  the  Radio  Company,  and  have  indi- 
cated to  him  clearly  that  the  home  field  can  only  be  developed  by 
the  Tri-Ergon  Company.  In  fact,  since  I  sold  my  shares  to 
Clarke,  the  Radio  Company  has,  in  writing,  applied  for  a  license 


374    UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

from  the  American  Tri-Ergon  Company,  which  we  up  to  this 
time  have  not  granted.  You  will  bear  in  mind  that  the  Radio 
Company  has  a  50  per  cent  interest  in  all  the  patents  claimed  by 
the  Telephone  Company,  and  if  the  Radio  Company  thought 
they  had  patents  governing  talking  motion  pictures  with  sound 
on  film,  why  did  they  apply  for  a  license  under  the  Tri-Ergon 
Company  ? 

"I  had  stated  that  the  motion  picture  theatres  of  America 
would  be  fully  equipped  in  less  than  five  years.  I  overestimated 
the  time  it  would  take,  for  in  less  than  two  and  a  half  years  the 
motion  picture  theatres  of  America  were  changed  from  silent 
to  talking  motion  pictures.  If  the  schools,  churches,  and  homes 
of  America  have  not  as  yet  been  equipped  with  this  reproducing 
device,  it  is  because  incompetent  men  have  had  charge  of  this 
branch  of  the  business,  or  because  the  Telephone  Company  and 
the  Radio  Company  decided  to  go  slow,  knowing  that  the  patents 
necessary  to  sell  this  equipment  to  schools,  churches,  and  homes 
belong  to  the  American  Tri-Ergon  Company. 

"It  is  rather  laughable  to  note  the  common  term  used  by  the 
Radio  Company  and  by  the  Telephone  Company  with  reference 
to  equipments  made  by  other  manufacturers,  of  whom  there  are 
100  or  more;  they  are  referred  to  as  'bootleg'  equipment,  when 
the  fact  of  the  matter  is  that  every  equipment  now  installed  in 
America  to  reproduce  talking  motion  pictures  made  with  sound 
on  film  is  a  'bootleg7  equipment,  including  the  equipment  of  the 
Telephone  Company  and  the  Radio  Company. 

"You  asked  me  as  to  the  possible  royalties  the  American 
Tri-Ergon  Company  hopes  to  collect  after  it  has  gone  through 
the  delays  that  the  Telephone  Company  is  creating  for  it.  These 
royalties  are  as  follows :  the  charge  now  made  by  the  Telephone 
Company  to  an  exhibitor  of  motion  pictures  they  call  a  service 
charge  rather  than  a  license  charge,  but  in  reality  it  is  a  license 
charge,  because  the  employe  of  the  theatre  is  perfectly  capable 
of  servicing  this  equipment  himself.  The  amount  they  collect 
ranges  between  $25  and  $40  per  week.  The  20,000  motion  pic- 
ture theatres  in  America  pay  well  over  $1,000  per  year  per 
theatre,  or  $20,000,000. 

'The  present  producers  of  motion  pictures  who  are  under  a 
license  either  by  the  Radio  Company  or  by  the  Telephone  Com- 


EPILOGUE  375 

pany,  and  who  now  pay  royalties  to  either  one  of  these  two  com- 
panies, manufacture  about  600  feature  pictures  per  year,  each 
picture  having  approximately  6,000  feet,  or  3,600  reels  of  feature 
pictures,  and  probably  three  times  as  many  of  the  pictures  not 
known  as  feature  pictures,  including  comedies,  educational  films, 
newsreels,  and  other  subjects  used  on  the  programs  of  the  motion 
picture  theatres,  averaging  about  one  reel  each.  That  would 
be  7,200  reels  at  $500  per  reel,  or  $3,600,000. 

"In  addition  to  this  there  are  many  millions  spent  by  the 
studios  for  equipment  for  the  recording  of  sound,  and  the  field 
of  manufacturing  recording  equipment  will  develop  along  with 
the  other  branches  that  I  have  mentioned.  The  million  class- 
rooms and  the  250,000  churches  in  America,  making  a  total  of 
1,250,000 — a  fair  license  charge  to  them  would  be  $5  per  week, 
or  one-fifth  of  that  which  is  now  paid  by  the  theatres.  The  pros- 
pective royalties  from  that  field  amount  to  1,250,000  times  $5 
per  week,  or  $325,000,000  in  royalties  from  those  two  fields  when 
fully  developed. 

'There  are  15,000,000  homes  in  America.  When  they  are 
equipped,  a  fair  ro}^alty  charge  per  home  would  be  $1  per  week, 
which  would  net  $780,000,000  a  year.  It  is  readily  seen  that 
the  sums  of  money  involved  in  the  patents  of  the  American 
Tri-Ergon  Company  would  result  in  the  largest  sums  ever  col- 
lected in  royalties  for  patents  in  the  history  of  our  Patent 
Office ;  the  sums  of  money  it  will  be  possible  for  the  American 
Tri-Ergon  Company  to  collect  are  equal  to  the  wealth  of  a  nation. 
These  latter  two  items  amount  to  $1,105,000,000.  If  but  5  per 
cent  of  this  plan  could  be  realized,  there  would  be  a  royalty  col- 
lected of  more  than  $55,000,000  a  year. 

"I  don't  think  it  is  at  all  imaginary,  or  in  the  far  distance, 
to  hope  that  at  least  one  out  of  every  twenty  homes  in  America 
will  be  equipped  with  talking  motion  pictures  within  the  next 
five  years,  and  I  feel  sure  that  when  the  time  comes  for  those 
responsible  for  the  education  of  America  finally  to  adopt  talking 
motion  pictures,  practically  all  of  the  classrooms  will  be  equipped 
simultaneously.  As  to  the  possibilities  of  profit  from  the  manu- 
facturing of  the  subjects  to  be  used  in  schools,  churches,  and  in 
homes,  that  is  so  fabulous  that  I  daren't  venture  to  say  what  it 
would  amount  to  per  year.  You  will  bear  in  mind  that  if  the 


376     UPTON  SINCLAIR  PRESENTS  WILLIAM  FOX 

American  Tri-Ergon  patents  are  sustained,  no  one  can  manu- 
facture motion  pictures  with  sound  on  film  for  the  theatre,  the 
home,  the  school,  the  church,  or  for  any  other  use,  unless  a  license 
is  procured  from  the  American  Tri-Ergon  Company. 

"This  is  what  was  involved  when  the  Octopus  was'  carrying 
on  his  battle  with  the  little  Fox.  Whether  or  not  the  Octopus 
really  understood  this  picture  as  described  now — whether  he 
understands  it  any  better  now  than  when  I  first  pictured  it  to 
him  in  1927 — that  I  don't  know,  but  the  fact  is  that  I  hope  to 
live  to  see  the  day  when  the  developments  herein  described  will 
be  fully  accomplished. 

"If  we  are  successful,  it  is  our  purpose  to  take  our  rightful 
position  and  manufacture  this  equipment  and  lease  it  and  do  all 
the  things  that  the  Telephone  Company  is  doing  now,  and  do  it 
properly,  because  we  will  be  organized  for  that  purpose,  whereas 
the  Telephone  Company  is  not  properly  organized  for  that  pur- 
pose. 

"If  ever  I  succeed  in  installing  motion  picture  equipment  in 
all  the  classrooms  in  America,  I  will  accomplish  that  which  is 
my  ambition,  to  see  the  future  children  of  America  educated  by 
talking  motion  pictures,  uniformly  educated,  and  we  would  teach 
them  as  much  in  three  hours  as  they  now  learn  in  five.  What 
royalty  each  classroom  will  pay  is  wholly  immaterial  to  me.  I 
am  not  so  sure  that  I  will  want  royalty;  that  part  of  the  enter- 
prise will  not  be  for  the  purpose  of  making  money.  As  to  the 
figure  of  1,000,000  classrooms  at  $5  per  week,  I  would  say  that 
figure  could  be  reduced  to  almost  nothing  as  far  as  I  am  con- 
cerned. If  the  educators  of  the  country  should  decide  that  these 
educational  films  should  be  manufactured  by  anyone  else  besides 
myself,  I  would  be  willing  to  authorize  a  company.  My  idea 
is  that  the  texts  would  be  selected  by  the  Federal  authorities, 
and  the  Government  could  well  manufacture  those  pictures  if 
they  felt  like  it," 

That  brings  my  story  to  an  end ;  and  I  have  only  to  add  what 
the  story  means  to  me  and  why  I  have  taken  the  trouble  to  write 
it  and  to  publish  it. 

In  our  country  is  a  great  machine  of  business  and  money 
which  governs  the  lives  of  the  plain  people,  and  they  do  not 


EPILOGUE  377 

often  get  a  look  into  the  insides  of  it.  Here  they  have  a  chance, 
and  they  will  be  wise  to  make  the  most  of  it.  The  wholesale 
gambling  and  wrecking  which  you  see  here  is  going  on,  not 
merely  with  motion  pictures,  but  with  oil,  steel,  coal,  power, 
food — and  above  all,  money.  It  is  going  on,  not  merely  in 
America,  but  in  every  great  country  in  the  world  except  Russia. 
The  problem  is  a  world  problem ;  because  of  such  things,  hundreds 
of  millions  of  people  are  homeless  and  jobless  and  starving,  all 
over  this  earth.  Can  any  thinking  man  or  woman  look  at  the 
picture  and  fail  to  realize  that  the  great  task  of  our  day  is  the 
taking  of  industry  and  finance  out  of  the  hands  of  profiteers 
and  speculators?  Is  it  not  obvious  that  the  producing  of  the 
means  of  human  life  must  be  organized  and  ordered,  and  made 
into  a  social  function? 

During  the  World  War  I  was  publishing  a  monthly  magazine, 
and  in  the  issue  of  September,  1918,  I  addressed  a  statement  to 
those  whom  I  greeted  as  "Gentlemen  of  America:  You  of  the 
older  generation,  statesmen,  rulers  and  masters,  who  made  the 
world  in  which  we  live,  whose  ideas  and  ideals  had  the  shaping 
of  it."  The  last  two  paragraphs  of  this  statement  will  serve 
fifteen  years  later  for  the  ending  of  this  book: 

"You  have  thrown  us  into  a  pit.  Will  you  help  us  now  to 
get  out  again?  Rest  assured,  we  mean  to  get  out — that  is  the 
final  resolve  which  this  world-tragedy  has  taught  to  the  common 
man.  You  who  have  the  wealth,  the  leisure,  the  training  in  com- 
mand, you  have  yet  time  to  help  us,  if  you  will.  If  you  can 
perform  the  supreme  act  of  humility,  of  self-renunciation,  if  you 
can  bring  yourself  to  cancel  your  paper  titles,  to  wipe  from  your 
hearts  the  ideals  of  private  profit,  and  lend  your  skill  and  energy 
to  the  making  of  a  free  and  happy  world! 

"Are  we  in  America  to  have  a  Bolshevik  revolution  ?  Or  can 
we  contrive  a  new  kind  of  revolution — a  democratic  revolution, 
in  which  men  of  all  classes  may  unite  in  the  abolishment  of  wage- 
slavery,  with  its  curses  of  poverty,  prostitution,  crime  and  war? 
Rest  assured  of  this  one  thing,  gentlemen  of  America ;  with  you 
or  without,  the  work  will  be  done;  the  world  in  which  we  live 
is  going  to  be  re-made,  and  never  again  will  those  who  seek  private 
advantage  be  masters  either  in  politics  or  in  industry/' 


Recent  boo\s  by  Upton  Sinclair 
THE  WET  PARADE 

Kathleen  Norris:  "Upton  Sinclair's  'The  Wet  Parade*  is  magnificent.  Not 
in  ten  years  have  I  read  a  novel  so  strong — so  daring — and  with  so  much  thrill 
and  humor  and  human  weakness  and  strength  on  every  page.  He  has  painted 
the  American  scene  as  no  other  writer  of  our  generation  could." 

Cloth  $2.00 
ROMAN  HOLIDAY:  A  Novel 

Gertrude  Atherton  writes:     "An  original  and  ingenious  idea." 

Cloth  $1.50,  paper  $1.00 
MOUNTAIN  CITY:  A  Novel 

Fulton  Oursler:  "A  corking  novel,  always  interesting  and  convincing.  .  .  . 
The  narrative's  interest  magnetizes  the  reader  as  completely  as  anything  you  have 
ever  done."  C|oth  $^50,  paper  $1.00 

BOSTON:  A  Novel 

An  inside  story  of  the  Sacco'Vanzetti  case,  and  the  picture  of  a  civilisation. 
Floyd  Dell  writes:  "To  my  mind,  in  spite  of  Tolstoi's  *War  and  Peace/  and  some 
of  Zola's  things,  there  has  never  been  any  fiction^  quite  like  this  of  yours.  The 
method  really  constitutes  a  great  literary  invention."  Two  Volumes  $2.50 

OIL! 

A  novel  of  Southern  California.  Sir  Arthur  Gonan  Doyle  wrote:  "I  was 
amazed  at  the  power  of  the  book."  Clarence  Darrow  writes:  "Few  novels  have 
impressed  me  as  much  as  4OilP  "  Cloth  $1.50,  paper  $1.0C 

MONEY  WRITES! 

A  Study  of  Present'Day  American  Literature.  E,  Haldeman'Julius :  "All  of 
'Money  Writes!"  is  great  stuff!  Congratulations!  A  hard  job  well  done!" 

$2.00 
THE  BRASS  CHECK 

A  Study  of  American  Journalism.  John  Haynes  Holmes:  "The  book  is  tre* 
mendous.  I  have  never  read  a  more  strongly  consistent  argument  or  one  so 
formidably  buttressed  by  facts.  You  have  proved  your  case  to  the  handle.  I  again 
take  satisfaction  in  saluting  you  not  only  as  a  great  novelist,  but  as  the  ablest 
pamphleteer  in  America  today.  I  am  already  passing  around  the  word  in  my 
church  and  taking  orders  for  the  book,"  Ninth  edition,  revised,  with  index. 

Cloth  $100,  paper  $1.00 


PUBLISHED  BY  UPTON  SINCLAIR,  LOS  ANGELES  WEST  BRANCH,  CALIFORNIA 


3 


^  QQ 


115701